Oil surges with high hopes ahead of US Federal Reserve meeting

Oil extended gains above $40 a barrel in New York as shrinking crude stockpiles and speculation that the Federal Reserve will keep interest rates low raised hopes that an economy ravaged by the pandemic may be on the mend.

U.S. benchmark crude futures rose as much as 5.1% on Wednesday. U.S. equities climbed with the S&P 500 Index gaining as much as 0.6%, boosted by the expectation the central bank will keep rates near zero. U.S. government data showed crude inventories fell 4.39 million barrels last week. The Energy Information Administration report also showed gasoline supplies declined.

“The Federal Reserve has been extremely dovish in all their previous meetings,” said Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago. “They’re going to do whatever they can do to kick start the economy and keep the economy going.”