Oil prices rose by more than a dollar on Thursday to top $116 a barrel on renewed hopes for a third round of monetary stimulus by the U.S. Federal Reserve despite weak economic data from China.
Brent crude futures were up $1.21 to $116.12 a barrel by 1155 GMT, having reached $116.38 earlier in the session.
U.S. crude was up 28 cents at $97.54 per barrel, off a three-month high of $98.29 hit earlier.
Investors and traders are betting that additional monetary stimulus is imminent after minutes from the last U.S. central bank meeting were released late on Wednesday.
The minutes noted that many Federal Reserve members “judged that additional monetary accommodation would likely be warranted fairly soon” unless the economy improves considerably.
This is being interpreted as a hint that the Federal Reserve could act at next week’s Jackson Hole Symposium, where Chairman Ben Bernanke and European Central Bank President Mario Draghi are scheduled to speak.
Dominick Chirichella, of the Energy Management Institute, noted that Bernanke had announced the second round of quantitative easing at Jackson Hole in 2010.
Further stimulus may weaken the dollar, which in turn will lift commodities priced in dollars, while any boost to the U.S. economy from the stimulus may also drive up oil demand.
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