Oil prices higher ahead of Fed and ECB announcements

Oil prices have climbed on the commodities market today (August 1st) ahead of crucial announcements from the US Federal Reserve (Fed) and the European Central Bank (ECB).

Both Brent Crude Oil Futures and West Texas Intermediate Crude Oil Futures made significant advances as the Fed commenced the latter half of its two-day interest rate talks.

Investors have been awaiting this vital information along with weekly energy inventories data from the US, which is the world's largest consumer of crude oil.

Earlier, the US Department of Energy reported that inventories of oil have dropped by 6.5 million barrels to 373.6 million barrels, while supplies were forecast to shrink by just one million barrels.

Traders are waiting to see what happens when the Fed's meeting comes to a conclusion later today, while a separate decision regarding the next steps for the eurozone amid its ongoing sovereign debt crisis will be announced tomorrow.

The Fed's top policymakers were expected to turn their backs on launching new stimulus measures to boost the US economy and earlier the Federal Open Market Committee - which sets US interest rates - began their discussions in Washington after sub-par growth figures were posted for the superpower.

Prices of the black stuff bounced after the Institute for Supply Management's factory index for the country posted a 49.8 reading in July from 49.7 in June, indicating the sector is creeping closer to growth, but is still in negative territory.

It is likely chairman of the Fed Ben Bernanke will forego announcing a third lot of large-scale asset purchases and will probably wait until the autumn before announcing more plans to buy debt.

At 16:20 BST, Brent Crude Oil Futures were one per cent higher to $105.9 per barrel, while West Texas Intermediate Crude Oil Futures gained 1.4 per cent to $88.8 per barrel.