Fed decision, weather among factors sending oil higher

The price of West Texas Intermediate crude oil for October delivery soared to over $82 per barrel Tuesday right after the Federal Reserve said it was cutting interest rates by 0.5 percent to 4.75 percent before settling at a gain of 94 cents on the day to $81.51 per barrel, a new closing record, while Brent crude added 52 cents to $77.50 per barrel on the Intercontinental Exchange in London.

Besides the rate hike, which could bring more foreign investors into the oil market, prices were up ahead of Wednesday’s US weekly inventories report, on news of storms that could enter the Gulf of Mexico’s oil producing regions, and on a report that an oil pipeline in northern Iraq had been bombed.

Nymex October gasoline was up 1.61 cents to $2.0603 per gallon, while November heating oil added 1.36 cents to $2.2432 per gallon and natural gas dropped 8.5 cents to $5.568 per 1,000 cubic feet.

The price of December gold was also significantly higher in New York in after hours trade following Fed’s announcement.

At 2:37 p.m. New York time, December gold was $8.50 higher to $732.30 per troy ounce, while it had been as high as $733.40 per ounce just before 2 p.m. there.

Shortly before the rate cut was announced, December silver was trading 3 cents higher to $12.93 per troy ounce but in after hours trade after the announcement it was up 6 cents more to $12.99 per troy ounce, while about half an hour before the close of floor trade in New York, October platinum was $4.10 higher to $1,305 per troy ounce.

December wheat on the Chicago Board of Trade dropped 6 cents to $8.69 per bushel as investors took little notice of an Australian report predicting a smaller harvest there than had been earlier forecast due to hot, dry weather.

November orange juice futures on the New York Board of Trade, however, added 2.05 cents to $1.2485 per pound in early afternoon trade after a storm that could become a hurricane later in the week was reported east of Florida.

Story link: Fed decision, weather among factors sending oil higher