Oil rises after U.S. Fed move
NEW YORK (Reuters) - Oil rose on Wednesday after Federal Reserve Chief Ben Bernanke gave no signs that the central bank was about to tighten monetary policy.
After getting an early boost from U.S. inventory data showing tightening gasoline stockpiles, oil markets extended gains after the Federal Reserve signaled it is in no rush to scale back its support for the U.S. recovery as it cut its forecast for 2011 economic growth.
Lower interest rates tend to fuel commodity prices, driving investors into riskier assets and pushing up prices. While the central bank noted energy and commodity prices were rising, it said their effects would be "transitory."
U.S. crude prices have risen more than 20 percent so far this year and consumers in the world's largest economy are starting to show signs of being hurt by higher fuel costs.
U.S. crude oil for May delivery settled at $112.76 a barrel, gaining 55 cents, after climbing to a session high of $113.40, just below the year's high of $113.48 hit on Monday.
In London, May Brent crude closed at $125.13 a barrel, up 99 cents, after hitting the day's high at $125.80, closing in on the year's high of $127.02 struck on April 11.
The dollar pared gains against the yen and held near a 16-month low against the euro after Bernanke's press convergence , and the Nasdaq jumped to a 10-year high as U.S. stocks rallied. <USD/> .N
Among wide-ranging comments about the economy, Bernanke noted that if oil prices don't increase significantly further, inflation would come down <ID:WEN2011>
"The Fed is sticking to its policy, and, as a result, we have to expect recent trends in the dollar and commodities to remain intact," said John Kilduff, partner at hedge fund Again Capital in New York.
Crude got an early lift from U.S. Energy Information Administration data showing domestic gasoline stockpiles fell 2.51 million barrels last week to the lowest level since August 2009, marking the 10th drawdown in a row.
U.S. May gasoline futures settled at $3.4194 a gallon, up 6.22 cents, extending gains for the fifth day and posting the highest close since the July 14, 2008 close at $3.5577.
Supply concerns ahead of the U.S. driving season have fueled gasoline's rise this week, after a power outage in Texas City, Texas temporarily shut a combined 4 percent of total U.S. refining capacity.
BP Plc's (BP.L) (BP.N) giant Texas City, Texas refinery remained idle Wednesday as power supply problems plagued the regional refining hub for a third day.
MIDEAST UNREST SUPPORTIVE
Fighting in Libya and violence in the Middle East was unabated with unrest raging in Syria and Yemen. Italian oil and gas group Eni (ENI.MI), reporting earnings on Wednesday, said production fell almost 9 percent in the first quarter because of situation in Libya.
Lending support to Brent, BP said the North Sea's Forties pipeline may have to be shut for a few days later this year due to the discovery of an unexploded German mine from World War Two.
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