OIL FUTURES: Nymex Crude Rises As Fed Sees Low Interest Rates

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NEW YORK (Dow Jones)--Crude futures followed equities higher Wednesday, in a late rally after the Federal Reserve reiterated its commitment to extremely low interest rates.

The generally upbeat statement at the conclusion of the Federal Open Market Committee's monthly meeting sent equities higher, giving oil market participants an opportunity to set aside concerns about rising U.S. crude inventories.

"This is still a complex that's driven primarily by financials, and within the financial space, the stock market appears to be the larger focus," said Jim Ritterbusch, president of the trading advisory firm Ritterbusch and Assoc. in Galena, Ill.

Light, sweet crude for June delivery settled 78 cents, or 1%, higher at $83.22 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 38 cents, or 0.4%, higher at $86.16 a barrel.

The Fed's statement was almost unchanged from its March meeting, but the repeated message of improving economic conditions and expectations of low interest rates encouraged investors back into riskier markets. Many markets had sold off earlier in the day after Standard & Poor's downgraded Spain's debt, a day after ratings for Greece and Portugal were lowered.

Recently, the Dow Jones Industrial Average was up 0.6% at 11059.

The oil market played down weekly U.S. Energy Information Administration data showing a 2-million-barrel increase in oil inventories in the week ended April 26, to their highest level since June. Analysts had given an average forecast for a gain of 800,000 barrels in a Dow Jones survey.

Crude stockpiles grew despite a 3.1-percentage-point increase in refinery utilization to 89% of capacity. A rapid increase in refinery processing rates has raised fears that fuel supplies will balloon this summer unless demand spikes. On Wednesday, the EIA said that distillate stocks, including heating oil and diesel, had risen 2.9 million barrels, more than double the 1.2-million-barrel forecast increase. Gasoline stockpiles fell 1.2 million barrels, defying expectations for a 600,000-barrel gain.

Refiners have increased utilization to take advantage of higher profit margins on fuel production, but "market fundamentals and stock levels are far from favorable with another supply glut lurking," wrote analysts with JBC Energy in Vienna.

Front-month May reformulated gasoline blendstock, or RBOB, settled 0.59 cent, or 0.3%, higher at $2.3327 a gallon. May heating oil settled 0.13 cent, or 0.1%, lower at $2.2290 a gallon.

More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close

-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com

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