Gulf News reported that oil rose for a second day in New York on speculation that Federal Reserve plans to keep US interest rates near a record low will bolster investor demand for commodities.

The International Monetary Fund said that futures advanced as much as 0.9% after the Fed's announcement sent the dollar to its lowest in more than a month against the euro, making assets priced in the US currency more attractive. The Federal Open Market Committee said it expects its benchmark interest rate to stay at exceptionally low levels at least through late 2014. A wider ban on Iranian oil than that announced this week by the European Union could boost crude by USD 30 per barrel.

Mr Sintje Boie who correctly predicted in November that oil prices would slide by year end said that "It's a big commitment from the central bank. For the markets it's a liquidity thing. All this liquidity must go somewhere and so we have some money also going into oil. Prices are higher because of this bubble of liquidity."

Crude for March delivery rose as much as 90 cents to USD 100.30 per barrel on the New York Mercantile Exchange and was at USD 100.18 in London. The contract rose 45 cents to USD 99.40.

Brent oil for March settlement was up USD 1.16 or 1.1% at USD 110.97 per barrel on the ICE Futures Europe exchange in London. The European contract's premium to Nymex crude was USD 10.71 per barrel. That's down from a record USD 27.88 on October 14.

The Fed had previously pledged to extend near-zero interest rates through mid 2013. Chairman Mr Ben Bernanke said that the central bank is considering additional asset purchases to improve growth. The dollar was down 0.4% at USD 1.3161 to the euro after earlier reaching USD 1.3175, its weakest since December.

(Sourced from Gulf News)