Oil climbs on rate cut rumours

29 January 2008

Crude oil prices continued to rise on Monday amid speculation of a further interest rate cut in the US.

The Federal Reserve last week implemented an emergency interest rate cut of 0.75 percentage points in an effort to halt the economic slowdown in the US.

That cut, coupled with news of a package of tax rebates designed to help stimulate economic growth, helped to allay fears of a downturn in demand for oil products and gave some support to crude prices which had fallen sharply in the preceding few days.

Prices fell significantly during Monday's early trading until speculation developed that the Fed is planning to cut interest rates by a further 0.5 percentage points this week.

Following the rumour US crude recovered its early losses to close up 28 cents at $90.99 (£45.81) a barrel and Brent crude gained 48 cents to settle at $91.38.

Meanwhile, Eurofuel, the European heating oil association, has told an EU conference the fuel has a role to play in meeting Europe's future energy needs, reports Parliament magazine.

It claimed using a combination of heating oil, solar energy and energy efficient boilers and could prove to be a sustainable home heating solution.

Click here to view domestic heating oil price trends.