2008-10-30

Oil ended more than 7% higher

  • Oil ended more than 7% higher
  • Oil ended more than 7% higher
  • Oil ended more than 7% higher
Oil ended more than 7% higher

Oil ended more than 7 percent higher on Wednesday as the dollar was on pace for its biggest one-day decline in 13 years after an expected cut in U.S. interest rates.

The U.S. Federal Reserve cut a key interest rate by a hefty half-percent to prevent a widening credit crisis, taking its target for overnight bank lending to 1 percent, the lowest since 2004.

Stocks gyrated in highly volatile trade following the rate cut while the dollar pared losses against the euro but was down sharply against a basket of currencies.

U.S. crude rose $4.77, or 7.6 percent, at $67.50 a barrel.

London Brent crude settled up $5.18 at $65.47 a barrel.

"This latest Fed rate cut hopefully could serve to revive the economy and for the long-term improve demand for crude oil and petroleum products," said Andy Lebow, a broker at MF Global.

"At the moment, I don't see the Fed decision affecting session prices on crude futures. NYMEX crude is holding on to large gains made earlier. It doesn't look like there is any impulse buying or selling at the moment," he said.

The global financial crisis has hit oil demand and sent crude prices tumbling from record highs over $147 a barrel struck in July.

Earlier this year, investors poured cash into oil and other commodities as a hedge against inflation and the slumping greenback.