* U.S. Fed says to buy $300 bln in long-term U.S.
Treasuries
* U.S dollar steadies after falling most since 1985
* U.S. crude oil stocks up 2 mln bbls -EIA (Updates prices,
adds details)
By Fayen Wong
PERTH, March 19 (Reuters) - Oil rose 2 percent to above $49
a barrel on Thursday, after a surprise move by the Federal
Reserve to buy government bonds on a large scale revived hopes
the battered U.S. economy could soon begin its recovery.
The U.S. Federal Reserve on Wednesday stunned markets by
announcing it would pump another $1 trillion into the ailing
U.S. economy by buying long term government debt for the first
time since the 1960s and by expanding its purchases of mortgage
bonds. []
U.S. light crude for April delivery <CLc1> rose 96 cents to
$49.10 a barrel by 0510 GMT, after having touched $49.83
earlier, erasing some of previous session's losses.
London Brent crude <LCOc1> rose 97 cents to $48.63.
"It's a combination of a drop in the U.S. dollar and the
Fed's move that has pushed up oil prices," said David Moore, a
commodity strategist at the Commonwealth Bank of Australia.
"But I suspect more of it is probably on hopes that U.S.
policy stimulus would help turn the economy around, or at least
stabilise it."
The dollar inched up against a basket of currencies on
Thursday, after logging its biggest daily fall since 1985, as
the Fed's move to buy long-term Treasuries, aimed at
resuscitating lending, prompted a sharp fall in market interest
rates. []
The Fed's move also sent Asian stocks to a five-week high,
as bank shares helped extend a recent rally, and on broader
optimism that a stronger U.S. economy will help the continent's
export-dependent economies. []
Still, analysts cautioned that a continued weakness in
demand could limit oil's gains in the near term.
Earlier on Wednesday, oil fell after data showed U.S. crude
inventories swelled to the highest level in nearly two years
and the World Bank cut its 2009 forecast for China's economic
growth by one percent to 6.5 percent. []
In its weekly report, the U.S. Energy Information
Administration (EIA) said crude oil stocks rose 2.0 million
barrels to 353.3 million last week -- double the increase
forecast by analysts -- while gasoline supplies jumped by 3.2
million barrels, countering forecasts of a 1.2-million-barrel
drop. []
Slumping demand and rising inventories have helped drag oil
off record highs over $147 a barrel struck in July as the
economic meltdown hit consumption across the globe.
But oil prices, which sank to levels below $35 last month,
have since stabilised in the $40-$50 region, as producer group
OPEC cuts output by 4.2 million barrels per day and vowed on
Sunday to achieve stricter enforcement of existing curbs.
"While some see the possibility of breaking out of this
range to the upside, we maintain that despite OPEC supply cuts
in the making, demand considerations will continue to shape the
path of oil prices this quarter and next," Harry
Tchilinguirian, a senior oil analyst at BNP Paribas, said in a
research note.
Separately, OPEC kingpin Saudi Arabia told Reuters on
Wednesday that existing output curbs made by the cartel group
were more than enough to balance the oil market and no further
reductions were needed with the group's increased adherence.
[]
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
