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Oil extends advance on Fed hopes

Saturday, September 08, 2012 | Posted by | | Edit Post
 
Oil advanced for a third day as US payrolls increased less than expected in August, raising speculation that the Federal Reserve will boost stimulus measures to spur economic growth.

Prices gained 0.9 per cent after the Labor Department reported the economy added 96,000 workers last month, less than the 130,000 median estimate in a Bloomberg survey of economists. The Federal Open Market Committee will meet Sept. 12-13 to discuss monetary policy.

“More than anything I think attention is focused on the employment numbers this morning, which were really bad,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “They made it easier for the FOMC to make some moves for stimulus when they meet next week. We may see some volatile days before they make their announcement Thursday.”

Crude for October delivery rose 89 cents to $US96.42 a barrel on the New York Mercantile Exchange, the highest settlement in a week. Futures dropped 5 cents this week and are down 2.4 per cent this year. They have advanced 24 per cent from the year’s low of $US77.69 a barrel on June 28.


Brent oil for October settlement increased 76 cents, or 0.8 per cent, to end the session at $US114.25 a barrel on the London- based ICE Futures Europe exchange.

The lower-than-forecast employment growth will move the Fed closer to more quantitative easing, Pacific Investment Management Co.’s Bill Gross said. The Fed implemented two rounds of large-scale asset purchases totaling $US2.3 trillion from December 2008 to June 2011.

Policy makers will give “strong hints” or provide “positive action” at the FOMC meeting, Gross, who runs the world’s biggest bond fund, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

Source: BusinessDay

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