NEW YORK (CNNMoney.com) -- Oil prices set an intraday record above $101 a barrel and reached another settlement high Wednesday, as traders took the Federal Reserve's weak economic report as a signal that more interest rate cuts are coming.
Crude prices reached as high as $101.32 a barrel in afternoon trading - crushing the intraday mark of $100.10 reached Tuesday - before settling at $100.74, up 73 cents from the previous top close of $100.01.
The Fed statement fueled perception that it may cut interest rates again to keep the economy afloat, which would also sustain demand for oil, said senior analyst Phil Flynn of Alaron Trading.
"The Fed has voted for bear," said Flynn. "More rate cuts mean a weaker dollar which could mean higher oil prices, higher commodity prices. It was enough to give us a boost."
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Oil recently hit the one hundred dollar mark, and has now reached over one hundred and one. The fact that oil prices rise is shocking, but many people seem to think that it is special the oil prices passed a nice round number like one hundred. The interesting news is that this may be due in part to the interest rate cuts by the fed. The slight amount of inflation caused by lower interest rates could cause oil prices to increase faster than normal.
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