Oil gains after Fed decision, drop in supplies
NEW YORK (AP) -- The price of oil bounced around but closed with a gain Wednesday as the U.S. Federal Reserve decided to start to reduce its monetary stimulus and U.S. oil supplies fell for a third straight week.
Benchmark U.S. crude for January delivery gained 58 cents to $97.80 a barrel on the New York Mercantile Exchange. Oil rose as high as $98.01 in the morning.
The Federal Reserve decided to reduce its stimulus for the U.S. economy because the job market has shown steady improvement. Investors had feared such a move because Fed policies have encouraged investment in risky assets like oil. But the notion of a stronger U.S. economy, and more demand for fuel, prevailed on Wednesday.
Meanwhile, the Energy Department said crude oil supplies fell by 2.9 million barrels last week. Supplies of distillate fuels like diesel fell, while gasoline supplies rose less than expected, helping to boost oil prices.
At the gas pump, the average price for a gallon of gas held at $3.22. That's down 4 cents from a week ago and 2 cents less than at this time last year, according to AAA.
In London, the February contract for Brent crude, a benchmark for international oils, was up $1.19 to 109.63 a barrel on the ICE Futures exchange.
In other energy futures trading on Nymex:
- Wholesale gasoline gained 5 cents to $2.70 a gallon.
- Heating oil added 5 cents to $3.01 a gallon.
- Natural gas fell 4 cents to $4.25 per 1,000 cubic feet.
Pablo Gorondi in Budapest contributed to this report.