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Oil Jumps 5% to Over $28 on Fed Steps to Support Economy

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LONDON—Oil jumped 5 percent on Tuesday to above $28 a barrel, supported by steps by the U.S. Federal Reserve to bolster the economy and hopes the United States will soon reach a deal on a $2 trillion CCP virus aid package.

The Fed on Monday rolled out an array of programs including backing for the first time corporate bond purchases. U.S. Treasury Secretary Steven Mnuchin voiced confidence that a deal on the aid package would be reached soon.

“This is giving significant buoyancy to oil prices, at least in the short term,” said Eugen Weinberg, analyst at Commerzbank.

“It is highly questionable whether the good mood will continue on the oil market, however.”

Brent crude was up by $1.38 a barrel, or 5.1 percent, to $28.41 by 10:07 GMT. The global benchmark fell to $24.52 on Wednesday, its lowest since 2003.

U.S. West Texas Intermediate gained $1.54, or 6.6 percent, to $24.90.

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The expected stimulus pushed the U.S. dollar lower against other currencies. A weaker dollar tends to support the price of oil and other dollar-denominated commodities.

Still, the price of oil has halved in 2020, hit by the demand shock caused by the virus outbreak and government restrictions to contain it, and the sudden removal of measures by OPEC and other nations to limit supply.

British Prime Minister Boris Johnson ordered Britons on Monday to stay at home to halt the spread of the virus, imposing curbs on everyday life without precedent in peacetime.

Epoch Times Photo
British Prime Minister Boris Johnson gives his daily COVID-19 press briefing at Downing Street in London on March 22, 2020. (Ian Vogler-WPA Pool/Getty Images)

A deal by the Organization of the Petroleum Exporting Countries and other producers including Russia fell apart in early March, when Moscow refused to support further output curbs aRead More – Source