Oil prices rose for the eighth session in a row, with Brent crude trading near a four-month high, boosted by the Federal Reserve’s move last week to stimulate the US economy.
The central bank said on Thursday that it would inject $40 billion a month into the economy.
Brent crude for November delivery was up 26 cents at $116.92 a barrel, while US crude was up 1 cent to $99.01.
There are fears that high oil prices could hamper economic recovery.
The Fed’s announcement that it would start a third round of bond-buying, known as quantitative easing, has been dubbed QE3.
Oil prices rose for the eighth session in a row, with Brent crude trading near a four-month high
“The big question is how long this Fed-inspired rally will continue, as QE3 was the last bazooka to be used in the central bank’s arsenal,” IG markets said in a report.
“For the time being, [the oil price] has given a powerful shot in the arm for global markets.”
But Victor Shum, managing director of consultancy IHS Purvin & Gertz, said the current price “doesn’t do any favors” for a global economy that is struggling to get back on track.
“A price rally like we are seeing now is only going to do more damage,” he said.
But he added that he did not expect this level of trading to last.
“Fundamentals at the moment are not indicative of these prices, and I don’t see oil being able to sustain this rally.”
The US central bank has announced it will resume its policy of pumping more money into the economy via so-called quantitative easing.
The Federal Reserve said it will buy “additional agency mortgage-backed securities at a pace of $40 billion per month”.
The central bank also said it could increase the size of its purchases if the economy does not improve.
The economy is a pivotal issue in this year’s US presidential election.
The US central bank has announced it will resume its policy of pumping more money into the economy via so-called quantitative easing
Interest rates in the US have been close to zero for several years now, and the Fed again kept them at below 0.25%.
“The committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” said the Fed, led by chairman Ben Bernanke.
US stocks, which had been little changed, gained after the announcement. The benchmark Dow Jones average was 0.7% higher.
The US central bank has tried to support the economy by quantitative easing – buying $2.3 trillion in bonds in two rounds.
The Fed calls such measures “asset purchases”, where the central bank buys bonds to keep the long-term cost of borrowing down. The last round of asset purchases ended last year.
Mortgage-backed securities are debt backed by loans made to homeowners.
The unemployment rate in the US has been above 8% since January 2009, but the current 8.1% is down from the recent high of 10% in October 2009.
“To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens,” the Fed said.
The Fed also confirmed that its $267 billion programme to reduce long-term borrowing costs for firms and households would continue for the rest of the year.
In a move dubbed “Operation Twist”, the central bank buys longer-term bonds from retail lenders and swaps them for shorter-term bonds.
France’s President Francois Hollande has outlined a series of budget measures, including cuts, aimed at achieving economic recovery within two years.
“I have to set the course and the pace” to combat “high joblessness, falling competitiveness and serious deficits“, he said in a televised interview at TF1.
“My mission is a recovery plan and the time frame is two years,” the president added.
Francois Hollande has outlined a series of budget measures, including cuts, aimed at achieving France’s economic recovery within two years
Critics have accused the Socialist president of procrastination since his election in May.
During the interview, Francois Hollande outlined a series of measures, including spending cuts and extra taxes totalling 30 billion euros.
“We will not spend a euro more in 2013 than in 2012,” he said.
Francois Hollande also said that a planned 75% upper tax rate to be imposed on annual income above 1 million euros ($1.28 million) could be dropped after two years.
However, polls have shown that the public is losing confidence in the government.