The far month crude futures contract hit $100 a barrel today after the Fed took a free handed step of third round of quantitative easing, saying it would buy $40 billion of mortgage-backed securities each month to support the economy.

Crude for October delivery rose 86 cents to $99.18 a barrel in electronic trading on the New York Mercantile Exchange. Oil futures gained 1.3% in New York Thursday to settle at their highest level in four months after the Fed said that it would buy $40 billion a month of mortgage-backed securities for an unlimited period.

The Federal Reserve also extended its program of buying long-dated and selling short-dated securities and said that it would keep interest rates at ultra-low levels until mid-2015.

The announcement from the Federal Reserve weighed on the U.S. dollar. Dollar-denominated commodities such as crude oil tend to move inversely with the U.S. currency.

The U.S. government's budget deficit for fiscal 2012 crossed the $1 trillion mark in August, the Treasury Department said on Thursday, to stand at $1.16 trillion. The government ran a monthly deficit of $191 billion, Treasury said, spending $369 billion and taking in $179 billion. The year-to-date figure marks the fourth consecutive year of $1 trillion-plus deficits, all under President Barack Obama. The federal government's fiscal year runs from October to September.

Energy traders this week have also been on the alert for developments in the Middle East after the U.S. ambassador to Libya was killed in Benghazi on Tuesday. Violence continued Thursday after protestors stormed the grounds of the U.S. embassy in Yemen. No embassy personnel was injured in the attack.

MCX September crude futures above Rs 5400 levels with resistance near Rs 5440 and Rs 5500 levels.

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