Oil prices rise for third day amid talk of Fed plans to boost growth
OIL rose for a third day on speculation that US central bankers will act to spur economic growth, boosting fuel demand.
Futures climbed as much as 2.3pc after Federal Reserve Bank of Atlanta president Dennis Lockhart said a fragile recovery may require more stimulus.
Meanwhile, European Central Bank president Mario Draghi said officials stand ready to act as the euro region's expansion outlook worsens. Oil reduced gains after government data showed inventories dropped less than expected.
"The market is expecting some type of monetary easing programmes and that would most likely help the market in terms of providing some stability," said Kyle Cooper, director of commodities research at IAF Advisors in Houston. "The inventory report showed there is no shortage of crude."
Oil for July delivery surged $1.40, or 1.7pc, to $85.69 a barrel on the New York Mercantile Exchange. Futures traded at $86.03 a barrel. Prices have risen 3pc so far this week from an eight-month low on June 1.
Brent oil for July settlement gained $2.19, or 2.2pc, to $101.03 on the London-based ICE Futures Europe exchange.
"Looks like central banks are going to increase policy accommodation and you are going to see more stimulus," said Phil Streible, a Chicago-based commodities broker at RJO Futures. "Oil is following other risk assets like stocks."
Mr Lockhart said extending Operation Twist, a programme to lengthen maturities of debt on the central bank's balance sheet, is an "option on the table."
Prices also rose as Iran accused the United Nations agency that oversees nuclear inspections of spying and vowed never to suspend uranium enrichment.
The comments by Ali Ashghar Soltanieh, Iran's envoy to the International Atomic Energy Agency, were made at a press briefing in Vienna and cast doubt on whether a deal allowing wider atomic inspections is possible.
Crude's relative strength index, a technical indicator, shows that a decline of more than 20pc from this year's high into bear market conditions is the most-exaggerated drop in more than 26 years. That suggests crude may extend its rebound from an eight-month low last week. (Reuters)