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Oil prices staged a sharp turnaround ahead of the close in floor trading at the NYMEX Wednesday, as traders speculated about the prospects for more Fed easing.
Tracking the rally in U.S. equities and metals, oil prices—which had been lower most of the day—gained about one percent to settle at session highs.
"There's a lot of talk about QE3 and that's driving stimulus hopes ahead of next week's Fed meeting," says Tradition Energy broker and analyst Gene McGillan. "It looks like markets want to rally."
Quantitative easing, or QE, entails the Fed's purchase of fixed income assets in an effort to drive investors into riskier assets, while at the same time keeping interest rates low. The Fed meets next week, and while most traders think it will not announce a new program at that July 31 meeting, there has been market speculation it may act.
After falling on bearish data on U.S. petroleum supplies, WTI oil prices rose nearly $2 from session lows to settle near $89 a barrel. September NYMEX WTI oil futures climbed from a intraday low of $86.84 to settle at $88.97 a barrel, Oil prices continue to rally in electronic trading.
Brent Crude futures lead the oil rally, rising to over $104.50 a barrel, and also continue to gain more ground in electronic trading.
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