Oil prices surge as Fed maintains stimulus

Crude prices climbed Wednesday as the Federal Reserve said it will maintain monthly bond purchases to stimulate economic growth after a two-day monetary meeting. On Wednesday afternoon, the U.S. central bank announced that it will continue the pace of buying 85-billion-dollar bonds a month, while economists had expected a small tapering of the Fed's monetary stimulus in the amount of 10 billion to 15 billion U.S. dollars. Crude prices moved up after the announcement, as traders believed that the Fed move is going to boost commodity prices. Noting that the U.S. Economy has been expanding at a "moderate pace," the Fed decided to await more evidence that the recovery will sustain before pulling back the stimulus program. Oil prices was also underpinned as U.S. crude inventories decreased last week. Energy Information Administration said Wednesday crude supplies shrank 4.37 million barrels to 355.6 million barrels for the week ending Sept. 13, whereas market expectation had been a drop of 1.2 million barrels. Refineries operated at 92.5 percent of capacity, same as the prior week. On the economic front, privately-owned housing starts in August were at a seasonally adjusted annual rate of 891,000, up 0. 9 percent from the revised July figure of 883,000, the Commerce Department reported. Meanwhile, housing permits in August dropped 3.8 percent to a seasonally adjusted annual rate of 918,000. Light, sweet crude for October delivery moved up 2.65 dollars to settle at 108.07 dollars a barrel on the New York Mercantile Exchange. Meanwhile, Brent crude for November delivery added 2.41 dollars to close at 110.6 dollars a barrel.