Oil Price Increase with Fed Positive Economic Outlook

Oil prices recently rose following the boost of the Federal Reserve’s outlook in the economic growth of the United States. Benchmark West Texas Intermediate crude oil prices increased by 57 cents to reach $104.12 a barrel in the New York Mercantile Exchange. In London, the Brent Crude price rose by 85 cents to finish at $119.01 a barrel.

The Federal Reserve projects this year’s economic growth rate at around 2.4 to 2.9 percent this year. That is an increase from January’s growth forecast of 2.2 to 2.7 percent. Moreover, the Fed anticipates the unemployment rate to fall to between 7.8 to 8 % by the end of 2012. The current rate is 8.2%.

Natural gas also increased sharply. The recent increase occurred after Ecana, a big gas producer in Canada, said that it will reduce its output. Natural gas prices further grew following the release of the Fed’s forecast. Natural gas is higher by 9.5 cents to reach $2.07 for every 1,000 cubic feet.

Oil posted a recent drop following the report of the Energy Information Administration that the oil supplies of the United States grew by 4 million barrels in the previous week. The rise came as a surprise after the prediction of the industry trade group that there had been a reduction in output in the past week. Oil prices usually drop with more available supplies in refineries.

There was a record high increase in crude supplies at Cushing, Oklahoma, the delivery location of benchmark crude. High oil stocks in the location have caused benchmark current crude oil prices to fall compared to other types of oil. The supplies are anticipated to start dropping in May as soon as the Seaway Pipeline starts to carry crude oil from Cushing to the Gulf Coast.

Crude inventories also increased recently in the Gulf Coast, East Coast, Rocky Mountains and Midwest areas.

The demand for petroleum fell by 3.2% versus its level during the same period in the past year.

Elsewhere in the energy markets, prices of heating oil grew by 3 cents to reach $3.16 a gallon while gasoline prices fell by a cent for a price of $3.15 a gallon.