Oil hovers above $51 a barrel

20/03/2009

Crude oil prices are hovering above $51 (£35) a barrel in electronic trading on the New York Mercantile Exchange this morning (March 20th).

The commodity made steady gains yesterday, adding more than £3 dollars on the barrel by the close of trading and breaching the $50 mark for the first time since January.

Meanwhile, heating oil futures also rose on the bourse yesterday and have held steady during trading this morning.

Yesterday's spike was broadly attributed to the announcement of a massive debt purchasing plan unveiled by the Federal Reserve, a move which, while raising hopes of a faster-than-anticipated economic recovery in the US, also put pressure on the dollar on foreign exchanges.

However, Toby Hassall, head of research at Commodities Warrants Australia, told Reuters that while some investors are looking to make a profit on crude and commodities such as heating oil, there is still a lot of uncertainty as to whether the Fed's plan will inject lasting stability into the US economy.

"It has no doubt given the markets a shot in the arm but there is still unease about the implications of the latest Fed action," he commented.