Crude futures pared their gains Wednesday morning as worries over the fragile global economy sapped sentiment after the Federal Reserve promised to keep interest rates exceptionally low through at least the middle of 2013.
“Brent and WTI have made strong gains this morning on the back of brighter sentiment on markets after the Federal Reserve’s decision not to raise the federal funds rate until mid-2013,” said Carsten Fritsch, an analyst at Commerzbank AG, in a Bloomberg report.
U.S. crude supplies fell by 5.2 million barrels in the latest week, the American Petroleum Institute said.
On Wednesday, the International Energy Agency lowered its global oil demand outlook for 2011 due to weakness in the economy. The EIA cut its 2011 world oil demand growth by 60,00 barrels per day.
“The [crude] rally has mostly come from short covering. Whether it goes up again is a different story,” said Koichiro Kamei, an analyst at the Market Strategy Institute, in a Dow Jones Newswires report.
Tisha Guerrero contributed to this article.