Oil Price Rises with All Eyes on Fed
Source: AFP (11/2/10)
"Current oil price levels within a 'very comfortable zone.'"
Brent North Sea crude for delivery in December delivery rose $0.20 to $84.82 a barrel in London trade.
New York's main contract, light sweet crude for December, added $0.41 to $83.36.
International financial markets are on tenterhooks before the U.S. central bank's two-day meeting, which concludes on Wednesday, amid expectations that it could restart stimulus measures known as quantitative easing (QE).
The widely-expected move, dubbed QE2 by traders, has weighed on the dollar in recent weeks and months because new easing measures are expected to dilute the value of the greenback.
"As the U.S. Federal reserve stands by to announce its next round of quantitative easing, this is only likely to push the dollar lower," said analyst Ian Parrett at British consultancy Inenco.
Since June, the European single currency has risen by more than 15% in value against the dollar. A weaker U.S. unit tends to boost dollar-priced oil, which becomes cheaper for buyers that use stronger currencies.
"The dollar was still stuck near recent lows and there is little to be expected here until the Fed delivers its November statement," said analyst Andrey Kryuchenkov at Russian financial services firm VTB Capital.
"Naturally, a smaller-than-expected QE2 (package) would dent sentiment and support the dollar, with oil slipping back," he added.
Meanwhile, the oil market continued to draw strength from Saudi Oil Minister Ali al-Nuaimi, who said on Monday that current oil price levels at above $80 a barrel were within a "very comfortable zone."