Oil Rises From 10-Month Low on Shrinking U.S. Stockpiles, Fed Statement - Bloomberg

Oil rebounded from a 10-month low in New York as investors bet fuel demand will increase amid shrinking stockpiles and comments by the Federal Reserve that it is prepared to use a range of tools to bolster the economy.

Futures gained for the first time in three days after the Fed said in a statement yesterday it will keep interest rates near zero until mid-2013 and use other tools “as appropriate.” Crude inventories fell the most since June, according to the industry-funded American Petroleum Institute. An Energy Department report today may show stockpiles rose a third week.

“The Fed’s announcement to keep the interest rate low reversed the appetite for risk asset classes,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore, who predicts crude in New York will average $100 a barrel in the third quarter. “The other key factor is the surprise drop in U.S. crude inventories. That’s boosted some of the oil sentiment.”

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