Commodity Daily News

Crude Oil Prices Reverse Losses

Crude Oil prices rose more than 2% to above $50 a barrel on Thursday, after a surprise move by the Federal Reserve to buy government bonds revived hopes the battered U.S. economy could soon begin its recovery. Oil's rebound was also supported by a sharp drop in the USD, which posted its largest percentage drop since 1985, as the Fed's move, aimed at resuscitating lending, prompted a sharp fall in market interest rates.

The U.S. Federal Reserve on Wednesday stunned markets by announcing it would pump another $1 trillion into the ailing U.S. economy by buying long-term government debt for the first time since the 1960s, and by expanding its purchases of mortgage bonds. Still, analysts cautioned that a continued weakness in Oil demand could limit Crude's gains in the near term. Slowing demand and rising inventories have helped drag Crude Oil off record highs over $147 a barrel struck in July as the economic meltdown hit consumption across the globe. But oil prices, which sank to levels below $35 last month, have since stabilized in the $40-$50 range, as the Organization of Petroleum Exporting Countries (OPEC) cut output by 4.2 million barrels per day and vowed on Sunday to achieve stricter enforcement of existing curbs.