Upcoming Fed Statement Drives Oil prices Higher

By now, we are almost aware that United States of America is the biggest user of the crude and that any kind of economic news in USA affects the import-export and the price scenario of the crude oil across the globe. Before the Fed policy statement signaled that the central bank would now add up the economic stimulus in the country, oil prices have already rose and has clearly showed the bullish signals anticipating that the oil prices are sure to rise. It was only yesterday that the futures rose by almost 1.2 percent.

Besides that the Federal Open Market Committee aims to renew its commitment to ASSET Purchasing Program (APP) which was declared to the public during the two-day meeting among the stakeholders that began yesterday. The data from the American Petroleum Institute showed that the US crude stocks increased by almost 4.2 million barrels last week. Moreover, West Texas Intermediate prices have been evidenced with longest run since April 2011. Experts claim that many people are getting optimistic about the global economic recovery and that the demand is gradually recovering. They also believe that the data provided by the Department of Energy will not change the direction of the market with significant effect.

As mentioned earlier, the change in the Asset Purchasing Program has been proposed. But, the Federal Open Market Committee is likely to change the policy of APP only after shaping that the benefits from the program seems to exceed any kind of risk of inflation or the financial instability. US crude stocks rose for the consecutive four weeks to 368.2 million last week which is higher even more than the month. And the Department of Energy shows the increment in supplies by 2.5 million barrels which may try to contradict to the price rise of oil. Regarding gasoline, derived from the crude, the inventories marched by 1 million barrels whereas its distillates, diesel and heating oil, have contradictorily dropped 500,000 barrels due to some unidentified and unmeasured circumstances.

Other interesting thing remains that China, the second-largest oil consumer, is likely to increase its buying of crude from the overseas by almost a 7.3 percent which happens to be the largest gain since 2010. Both demand and supply side factors have been seen rumbling around the crude oil prices, but even in such scenario, the demand side as usual looks stronger and therefore, the expectations of crude prices going up may persist.