Oil prices climb after Fed statement

17 March 2010

Written by John King

Crude oil prices recovered from early losses to rise 2.4 per cent during trading yesterday (March 16th), with a late rally seen after a statement from the Federal Reserve.

In the policy statement, the central bank once more vowed to keep interest rates at near-zero levels for an "extended period", an announcement which inspired confidence in the markets.

Foreign exchange traders took the statement as a signal to move out of the dollar and into riskier high-yield currencies such as the Australian and Canadian dollars.

In turn, with the dollar on the retreat, commodities such as crude and heating oil became more attractive to foreign traders and in Asian and European trading this morning both products have continued to rise.

Crude prices are now back above $82 (£53.85) a barrel, while heating oil prices are above $2.12 a gallon.

Ben Westmore, a minerals and energy economist at National Australia Bank in Melbourne, told Bloomberg: "The combination of the US dollar weakness and some euro strength really played well for commodities."

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