Oil prices hold on to gains made late Tuesday, driven by a weaker dollar as a result of the US Federal Reserve announcement to keep interest rates low until 2014.
Such a policy move by the Fed aims to bolster economic growth and stoke fuel demand in the world’s biggest crude consumer. Oil demand is expected to increase further.
Fuel consumption in the US rose 7.5 percent to 19.2 million barrels a day in the week ended January. 20, according to US Energy Department data. This was the largest increase since November 4.
Crude for March delivery rose as much as high as $100.24 a barrel on the NYMEX after the Fed statement which resulted in a weaker dollar across the board.
Brent oil for March settlement was also boosted to $110.71 a barrel on the London-based ICE Futures Europe exchange.
Meanwhile, another catalyst for an increase in oil prices could be the Iran oil embargo which the EU has agreed to impose on Iran. A halt of Iran’s oil exports to countries in the OPEC would lead to an increase in crude prices of as much as $30 a barrel, according to the IMF.