Commodities: Crude rises in skittish trade

Date: Thursday 26 Jan 2012

Crude oil futures rose on Wednesday as the Federal Reserve pledged to keep short-term interest rates low until late 2014.

The Fed noted that while the economy was expanding moderately, US unemployment was still elevated and the economy still faces "significant downside risks."

Oil prices enjoyed a brief spell above $100 a barrel following the Fed announcement on hopes that ultra low borrowing costs will help the US economy, a huge oil consumer, recover faster. Later in the session oil dropped under $98 after supplies data from the US Energy Information Administration.

The EIA said crude oil inventories rose by a bigger than expected 3.6m barrels for the week ended 20 January. However gasoline and distillate inventories declined over the week, a sign that demand has improved. Gasoline supplies fell 400,000 barrels and distillates were drained of 2.5m barrels in the last week, the EIA report said.

Crude for March delivery advanced 45 cents to $99.40 a barrel on the New York Mercantile Exchange.

ICE Brent crude for March delivery settled down 22 cents in London at $109.81 after striking a high of $110.89.

Among precious metals gold regained its allure, after a weak start to the session, after the Federal Reserve said it would keep interest rates ultra low for longer than expected.

Gold for February delivery soared $35.60 to $1,700.10 on the Comex division of the New York Mercantile Exchange. Silver bounced $1.15 to settle at $33.12 an ounce.

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