Crude Spikes on CB Announcement, Report

Crude rallied more than $4/barrel Wednesday as a flurry of bullish news awoke buyers. In the morning, five of the largest central banks in the world said they would inject cash into money markets. The move should help ease the burden of the credit squeeze on the world economy, potentially leading to greater energy consumption. "The energy markets have been interconnected with the global capital markets for some time now," said John Kilduff, vice president of risk management at MF Global. "The renewed outlook for energy demand has us back in rally mode; $100 is squarely back on the table and within reach before year end." In addition, crude inventories fell for the fourth straight week. The drop was less than expected however. Finally, Goldman Sachs (GS) raised its forecast for oil in 2008 on concerns that perceptions of weaker demand will encourage oil suppliers to limit supply. Goldman sees intermediate crude oil averaging $95/barrel in 2008, a $10 increase from previous forecasts. January crude traded $4.37 higher to $94.02/barrel.

Sources: Bloomberg, MarketWatch
ETFs: OIH, XES, USO

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