Oil breaks above $100 after Fed vows action on economy
The Federal Reserve says it will spend $40 billion a month for an indefinite period to buy mortgage-backed securities.
The price of oil broke above $100 a barrel Friday for the first time since early May after the U.S. Federal Reserve announced a plan to jolt the U.S. economy and unrest in the Middle East heightened supply concerns.
By early afternoon in Europe, benchmark oil for October delivery was up $1.84 at $100.15 a barrel in electronic trading on the New York Mercantile Exchange. Thursday, the contract closed at $98.31, up $1.30.
In London, November Brent crude was up $1.75 at $117.63 a barrel on the ICE Futures exchange.
The Fed said it will spend $40 billion a month to buy mortgage-backed securities for an indefinite period. The purchases are intended to lower long-term interest rates to spur borrowing and spending.
The Fed also extended a plan to keep short-term interest rates at record-low levels through to mid-2015, as it attempts to boost the economy.
Expectations of action by the Fed, as well as the European Central Bank and China's government, have kept oil in a narrow range the past few weeks.
Oil analyst Stephen Schork said that the Fed decision was tantamount to “flooding the market with dollars,” which weakens the American currency and helps make crude a cheaper and more attractive investment for traders using other currencies.
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