Brent Climbs More Than $1; Shrugs Off Fed Taper Announcement
Brent crude oil futures on Wednesday shrugged off the U.S. Federal Reserve's decision to begin tapering its stimulus program, maintaining gains that widened its premium to U.S. crude.
Both Brent and U.S. crude oil pared gains immediately after the 2 p.m. EST (1900 GMT) announcement, then bounced back several minutes later.
The U.S. Federal Reserve announced plans to trim its aggressive bond-buying program on Wednesday but sought to temper the long-awaited move by suggesting its key interest rate would stay lower for even longer than previously promised.
The central bank said it would reduce its monthly asset purchases by $10 billion to total $75 billion. It trimmed equally from mortgage and Treasury bonds.
"The Fed is indicating that their data is showing a strong enough economy that they're pulling back (monetary stimulus)," said John Kilduff, a partner with Again Capital LLC in New York.
"That's bullish for crude oil and refined product."
Strong demand for Brent from Mediterranean refiners in the absence of Libyan supply also boosted the international benchmark. Mediterranean refiners have more than doubled purchases of North Sea crude grades since November, an unusual move that is expected to extend into 2014 with British and Norwegian oil as the go-to substitute for absent Libyan barrels.
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