U.S. crude oil ended at a four-month high Thursday, after the U.S. Federal Reserve announced the much anticipated additional quantitative easing measures to stimulate growth in the world's largest economy. Prices were also supported by increasing tensions in the Middle East, with the U.S. Ambassador to Libya killed and protests spreading to more locations in the Arab world targeting the U.S.
The Federal Reserve's new steps to stimulate the sluggish U.S. economy kicks-off with the bank offering to buy $40 billion of agency mortgage-backed securities each month, starting Friday. The move makes the U.S. treasuries even less lucrative, with the Fed hoping cash-rich investors get off the sidelines to purchase consumer goods, riskier assets and homes.
In addition to embarking on a third round of quantitative easing, the Fed also extended its vow to keep interest rates at rock-bottom rates until mid-2015. Policy makers have also decided to keep in place the Operation Twist program that swaps short-term bonds for longer-term assets.
The weekly initial jobless claims in the U.S. rose more than expected, although unemployment rate dropped to 8.1 percent from 8.3 percent. Officials attributed the increase in jobless claims partly to the impact of Hurricane Isaac, as major storms can often delay unemployment filings.
Light Sweet Crude Oil futures for October delivery jumped $3.70 or 1.3 percent to close at $98.31 a barrel on the New York Mercantile Exchange Thursday.
Crude prices scaled a high of $98.58 a barrel intraday and a low of $96.51.
Yesterday, oil ended lower for the first time in six days after the Energy Information Administration weekly oil report showed an unexpected increase in inventories for the week ended September 07. Investors also anxiously awaited cues from the Federal Reserve meeting, with expectations high on further quantitative easing measures forthcoming.
The euro traded higher against the dollar at $1.2995 on Thursday, as compared to $1.2899 late Wednesday in North America. The euro scaled a high of $1.2967 intraday and a low of $1.2860.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.21 on Thursday, down from 79.70 in North American trade late Tuesday. The dollar scaled a high of 79.83 intraday and a low of 79.36.
In other economic news from the U.S, the Labor Department said initial jobless claims rose to 382,000 in the week ended September 8, from the previous week's revised figure of 367,000. Economists had been expecting jobless claims to edge up to 370,000 from the 365,000 originally reported for the previous week.
Separately, the Labor Department said its producer price index surged up by 1.7 percent in August following a 0.3 percent increase in July. Economists had expected the index to increase by 1.4 percent. Excluding the jump in energy prices as well as a notable increase in food prices, the core producer price index edged up by 0.2 percent in August after rising by 0.4 percent in July.
From the eurozone, the Swiss National Bank has decided to leave the minimum exchange rate unchanged at CHF 1.20 per euro as expected by economists. The central bank also retained the target range for the three-month Libor rate at 0.0-0.25 percent.
by RTT Staff Writer
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