London - AFP
Oil prices soared Wednesday, in line with rallying stock markets, after the Federal Reserve vowed to hold near-zero interest rates for the next two years, and before the latest snapshot of US energy inventories. In early afternoon deals, Brent North Sea crude for September jumped $3.96 to $106.50 per barrel. And New York\'s main contract, West Texas Intermediate light, sweet crude for delivery in September, rallied $3.13 to $82.43 a barrel. \"Brent and WTI have made strong gains this morning on the back of brighter sentiment on markets after the Federal Reserve\'s decision not to raise the federal funds rate at least until mid-2013,\" said Commerzbank analyst Carsten Fritsch. The US central bank maintained its key interest rate at the record low 0.0-0.25 percent -- in place since December 2008 -- and vowed to keep \"exceptionally low\" rates \"at least through mid-2013.\" The bank\'s policy committee stopped short of offering a successor to the $600 billion \"QE2\" stimulus programme that wound up in June but it said it was reviewing available tools to boost a slowing economy. The Fed also admitted economic growth this year had been \"considerably slower\" than expected and indicated inflation fears had eased. Meanwhile, the Paris-based International Energy Agency cut its estimate for global oil demand this year by 100,000 barrels per day because of a downward revision of demand in the second quarter, high prices and \"slowing economic growth.\" But the IEA also raised its 2012 forecast by 100,000 barrels per day, anticipating that Japan will increase its oil consumption to compensate for the loss of nuclear-generated electricity in the aftermath of the devastating March earthquake. The IEA\'s new forecasts put demand this year at 89.5 million barrels per day, up 1.2 mbd or 1.4 percent from 2010, with 2012 rising to 91.9 mbd, up 1.6 mbd or 1.8 percent from this year. \"Concerns over debt levels in Europe and the US, and signs of slowing economic growth in China and India have spooked the market and raised fears in some quarters of a double-dip recession,\" the IEA said in a monthly market report. \"From an oil market standpoint, perceived wisdom is that this must inevitably mean weaker oil demand to come.\" The IEA is the energy monitoring arm of the Organisation for Economic Cooperation and Development, or OECD, which groups 34 of the world\'s advanced economies. Later on Wednesday, the market will digest the US government\'s official update on energy reserves for the week ending August 5.