Money Matters - Simplified

Oil prices rise above $87 in Asia

Situation eased out a bit as the day progressed, with the U.S. Federal Reserve promising to maintain low lending rates for the next two years.

Oil prices in Asia rose above $87 a barrel Wednesday, breaking the shackles of a week-long dream of upsurge that was inspired by investor confidence.

Optimism has been riding high since a week as investors believe that the worldwide economy is not likely to slow down in the second half as had been expected.

Benchmark oil delivery up
In addition, the benchmark oil for September delivery was up 65 cents to $87.30 a barrel during afternoon Singapore time in electronic trading on the New York Mercantile Exchange (NYME).

In the meantime, Crude escalated $2.50 to take rest at $87.88 on Thursday closure.

In London, October delivery of the Brent crude lost 42 cents to settle at $109.40 a barrel on the ICE Futures exchange.

Meanwhile on Monday, the Dow Jones industrial average increased 1.9 percent, its third consecutive day of a positive trend.

Earlier on Aug. 9, oil was under $76 as investor were fearing that the United States could be on its way to an another recession, which would certainly knock down the crude market.

Fed assures low lending rates
However, situation eased out a bit as the day progressed, with the U.S. Federal Reserve promising to maintain low lending rates for the next two years.

Low interest rates will certainly have a direct impact on the bond yields. In addition, it will make sure that other fixed income securities remain low, dragging investors to commodities and stocks.

Meanwhile on Monday, the Dow Jones industrial average increased 1.9 percent, its third consecutive day of a positive trend.

"Bottom line, the Fed is shoving capital toward higher-risk asset classes, which not only include equities, but also hard assets such as gold and oil," stated The Schork Group, energy trader and analyst.