Oil price rises toward $96 as Fed fears ease
The price of oil rose Thursday on expectations the Federal Reserve's monetary stimulus campaign will stay in place despite a vow to begin scaling it back.
The official estimate of U.S. economic growth was Wednesday lowered to an annual rate of 1.8 percent for the January-March quarter, sharply down from a previous estimate of 2.4 percent. That raised hopes that the U.S. Federal Reserve will keep in place its bond buying program, which has been a boon to stock and commodity markets by lowering interest rates and weakening the dollar.
The Fed has said its $85 billion a month of government bond purchases could be scaled back starting later this year if the economy keeps improving.
Benchmark oil for August delivery was up 16 cents to $95.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 18 cents Wednesday to close at $95.50 per barrel.
Analysts said confidence indicators in Europe as well as speeches by Fed officials expected later in the day would provide further encouragement to markets.
"We expect more soothing comments from Fed speakers while Eurozone data will point to gradual improvement," Anthony Lam of Credit Agricole CIB in Hong Kong said in a commentary.
Brent crude, which is used to set prices for oil used by many U.S. refineries to make gasoline, rose 35 cents to $102.01 a barrel.
In other energy futures trading on the Nymex:
— Natural gas fell 0.4 cents to $3.733 per 1,000 cubic feet.
— Heating oil rose 0.9 cents to $2.863 a gallon.
— Wholesale gasoline rose 0.6 cent to $2.723 a gallon.