WTI oil price back near $90 ahead of next Fed meeting

24 January 2011 24 January 2011

BonTrade

WTI oil prices open the week’s trading session higher and climbing back near $90 a barrel as traders await the next US Federal Reserve meeting, where more new money is expected to be used to help support the fragile US economy.

Latest WTI Oil Price

US Light crude oil futures for March 2011 delivery was trading at $89.62 a barrel, 07.00 GMT this morning on the NYMEX.

US Fed Meeting and the US Dollar

The US Fed’s interest rate setting panel will gather on Tuesday and Wednesday, and are expected to continue to expand US money supply with a new $600 billion stimulus package.

“The Federal Reserve is expected to continue its bond purchases as the economy is likely to show modest improvement, hence the markets will react positively to it.” said Ong Yi Ling, investment analyst for Phillip Futures in Singapore.

As more dollars are created, the value of the US dollar takes a knock, adding weight to higher oil prices.

The latest managed money bets that crude oil prices will rise outnumbered short positions by 210,564 futures, according to the CFTC (Commodity Futures Trading Commission) in its weekly Commitments of Traders report.