Crude rises in Asia in line with Asian equities

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SINGAPORE: Crude futures soared in Asian trade Wednesday, mirroring equities markets and encouraged by the US Federal Reserve's two-year commitment to keep interest rates low, analysts said.

New York's main contract, light sweet crude for delivery in September, gained $2.42 to $81.72 per barrel in the afternoon.

Brent North Sea crude for September delivery added $2.30 to $104.87.

An Asian equities rally on Wednesday was spurring crude prices, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

"The indication about keeping interest rates low for two more years helped the relief rally that we are seeing in equities and that has also caused buying in oil futures," he told.

The Fed on Tuesday said it would maintain its key interest rate at the ultra-low 0-0.25 percent -- in place since December 2008 -- and vowed to keep "exceptionally low" rates "at least through mid-2013."

The move was to prevent the US economy from stalling as worries grew of a new recession in the world's largest oil consumer, with the Fed saying it expected growth had been "considerably slower" than expected so far this year.

Growth was also expected to be at a "somewhat slower pace" over the coming quarters, the Fed's Open Market Committee added, as "downside risks to the economic outlook have increased."

The Fed's interest rate commitment cheered markets, which had been hammered by Friday's credit downgrade of the United States by Standard & Poor's. (AFP)