Oil traded near the highest price in more than four months in New York as the Federal Reserve maintained an asset-purchase program to boost the economy of the world's largest crude-consuming nation.
West Texas Intermediate was little changed, heading for the biggest monthly gain since August. The Fed will keep buying securities at a rate of $85 billion a month, the Federal Open Market Committee said after a two-day meeting. The greenback traded near a 14-month low versus the euro, increasing the investment appeal of commodities priced in dollars. Oil gained a third day yesterday even after a government report showed U.S. crude stockpiles rose more than twice as much forecast.
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"The Fed is still providing enough money," said Andy Sommer a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland. "I'm pretty optimistic on the demand side. But there's an ongoing supply overhang and prices should come down in the spring."
WTI for March delivery was at $97.68 a barrel in electronic trading on the New York Mercantile Exchange, down 26 cents, as of 8:45 a.m. London time. The average volume of all contracts traded was 22 percent below the 100-day average. Futures gained 37 cents to $97.94 yesterday, the highest close since Sept. 14. Prices are up 6.4 percent in January and poised for a third monthly increase, the longest rising streak since April 2011.
Brent for March settlement on the London-based ICE Futures Europe exchange was at $114.63 a barrel, down 27 cents. The average volume of all contracts traded was 21.4 percent above the 100-day average. The European benchmark grade was at a premium of $16.95 to WTI futures, from $16.96 yesterday.
The dollar was at $1.3555 per euro. It reached $1.3587 yesterday, the weakest level since November 2011.
U.S. crude inventories increased by 5.9 million barrels last week, an Energy Information Administration report showed. Supplies were forecast to climb by 2.5 million, according to the median estimate of nine analysts surveyed by Bloomberg News. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI, rose 284,000 barrels to 51.7 million.
Gasoline supplies fell 956,000 barrels, the data showed. They were projected to gain by 1 million, according to the survey. Distillate-fuel stockpiles, including heating oil and diesel, dropped 2.3 million barrels, compared with a forecast decline of 500,000 barrels in the survey.
WTI may extend its rally as futures approach a bullish technical formation known as a "golden cross." The 50-day moving average, at $90.94 a barrel today, has pared its discount to the 200-day indicator to 3 cents, according to data compiled by Bloomberg. Investors typically buy contracts when a moving average rises over a longer-term one. Another indicator, the 14- day relative strength index, is higher than 70 for a third day, signaling the advance may stall.
The lowest oil volatility in 17 years is pushing down options costs, setting up trades that BNP Paribas SA and Commerzbank AG say will profit if Middle East supply disruptions send prices swinging again. BNP in Paris recommends buying contracts that pay should crude advance and financing them by selling bearish puts. Commerzbank sees value in bets on Brent climbing toward $130 a barrel.