BANGKOK - OIL jumped to near US$86 a barrel in Asia on Thursday as the dollar weakened moderately after the Federal Reserve's announcement it will buy $600 billion dollars of Treasurys to stimulate the US economy.
Benchmark crude for December delivery was up $1.04 at $85.73 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose 79 cents to close at $84.62 a barrel on Wednesday.
The announcement wasn't a surprise for markets but it underlined expectations that the dollar could weaken further and push up prices for commodities including oil. Since crude is priced in dollars, a weaker dollar makes it more attractive to buyers using foreign currencies.
Speculation about what the Fed would do has captivated energy traders for weeks. Now that it has been announced, the focus may shift to such basics as supply and demand. Oil and gas supplies are ample and demand is weak.
In its weekly report, the Energy Department said crude inventories increased by 2 million barrels to 368.2 million barrels for the week ending Oct. 29. The total was 9.6 percent more than the year-ago level and remained at the upper limit of the average range for this time of year.
In other Nymex trading in December contracts, heating oil added 2 cents to $2.35 a gallon, gasoline gained 3 cents to $2.14 a gallon and natural gas rose 1 cent to $3.84 per 1,000 cubic feet. In London, Brent crude climbed $1.01 to $87.40 a barrel on the ICE Futures exchange. -- AP
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