Crude Futures Prices Higher on Expectations of New Fed Stimulus

Crude futures prices were higher by 1.31 percent on expectations of a fourth set of financial stimulus from the Federal Reserve of the United States.

In early morning trading, crude futures prices for delivery in January were up by $1.12 to $86.91 per barrel.

According to analysts, riskier assets, like oil, were obtaining a boost from the expectations of the market that the Fed will be introducing new stimulus measures very soon.

The Fed may unveil new monthly Teasury purchases amounting to $45 billion that would start in the New Year, after the expiration of the current bond-buying program, Operation Twist. The latest decision on the financial policy is anticipated within the day.

The IEA has slightly increased its oil demand forecast for next year. But, it said that the slow rate of expansion of the world economy would make demand quite slow.

In its monthly report, the agency made an increase of 110,000 barrels on its oil demand forecast in 2013, to 90.5 million barrels daily.

According to the agency, developing markets keep on dominating oil demand growth. Five out of the ten highest crude consuming countries are currently non-OECD nations.

The report presents how growth is moving to the economies of developing markets and away from the developed economies of the world. The current oil prices have stayed constantly high, in spite of decreasing growth in the United States and Europe.

The condition of poor demand occurs when non-OPEC production is forecated to increase to its highest rate of growth since 2010, according to the IEA.

Shale growth in the United States is pushing total output, which is anticipated to increase to 54.2 million barrels daily. This is higher, by 70,000 barrels daily, compared to the previous projection.

OPEC ministers recently said that they were satisfied with the current oil prices as well as with the present demand. But, in another report, it said that the global economy’s weakness is causing too much uncertainty for the global oil demand forecast, which has a decreasing risk, particularly in the year’s first half.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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