Oil rises on inventories decrease, Fed statement

09:34, June 23, 2011      

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Crude prices rose on Wednesday as U.S. inventories decreased more than expected and the Federal Reserve decided to keep low interest rate for an "extended period. "

The Energy Information Administration said U.S. crude inventories fell 1.7 million barrels last week as refineries increased their capacity to the 11-month high of 89.2 percent. And the gasoline stocks also reduced by more-than-expected 500,000 barrels. Less supplies pushed crude prices up.

Oil got further strength after the Fed said it would keep its record low interest rate for longer time after a two-day policy meeting, citing the current slowing economic growth. In the statement, the central bank cut U.S. economy growth forecast from 3.1 to 3.3 percent made in April to 2.7 to 2.9 percent. But Fed Chairman Ben Bernanke said the slow down was temporary.

Meanwhile, European debt woes were eased as the new Greek government survived the confidence vote in parliament at midnight Tuesday, paving the way for the pass of the new austerity plan. Investors were hoping that it would help resolve Greece's debt crisis, a scenario which would bode well for oil demand.

Light, sweet crude for August delivery gained 1.24 dollars, or 1.32 percent, to settle at 95.41 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for August delivery rose 3.26 dollars, or 2.94 percent, to close at 114.21 dollars a barrel, and its premium to U.S. crude expand to 18.8 dollars.

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