Singapore: Oil prices were mixed in cautious Asian trade today after the Federal Reserve its benchmark interest rate at zero but warned about weaknesses in the global economy. News that the US central bank would keep borrowing costs at zero was broadly welcomed across Asia, with most stock markets up, as it eased concerns about a feared flight of capital from the region’s struggling economies.
It also weakened the greenback, making dollar-priced oil less expensive for traders with weaker currencies. However, Fed chief Janet Yellen said in a news conference that bank policymakers cited the ongoing crisis in China and recent turmoil on world markets as playing a role in the decision.
“The FOMC statement showed that policymakers are concerned about recent global developments and the tightening of financial conditions and their impact on economic activity,” Dutch bank ABN Amro said in a market commentary. It said the Fed policymakers “would like to see the extent to which these developments have impacted the US economy given the strong financial interconnectedness”.
On oil markets US benchmark West Texas Intermediate for October delivery fell 13 cents to USD 46.77 today and Brent crude for November rose six cents to USD 49.14. “The impact of the… decision is somewhat mixed,” said Bernard Aw, market strategist at IG Markets in Singapore. He said investors are likely to be cautious as they “are still digesting the rate decision and deciding what to make of it”. Oil prices had surged on Wednesday after the US Department of Energy revealed a 2.1 million barrel drop in inventories, fuelling hopes of a pick-up in demand in the world’s biggest economy.
