Oil rebounds on weak dollar

Written by: Pti
Subscribe to Oneindia News

London, Jan 13 (AFP) World oil prices climbed close toanother two-year peak today, as the euro strengthened againstthe dollar and traders absorbed news of a shock increase in USjobless claims.

Brent North Sea crude for delivery in February climbedas high as USD 98.67 per barrel in afternoon deals, afterpeaking yesterday at USD 98.85 -- which was the highest levelsince early October 2008.

The contract later stood at USD 98.45, up 33 centsfrom the closing level yesterday.

Elsewhere today, New York''s main contract, light sweetcrude for February, added 36 cents to USD 92.22 per barrel.

The market''s push higher is "all about the euro", VTBCapital analyst Andrey Kryuchenkov told AFP.

The European single currency jumped above USD 1.33today, thanks largely to successful Italian and Spanish bondauctions, supportive European Central Bank comments and poorUS data.

A weaker greenback boosts dollar-priced crude oil,which becomes cheaper for buyers using stronger currencies. Inturn, that tends to stimulate demand and push prices higher.

Oil had rallied for a third straight day yesterday,climbing in London to more than two-year highs, as the keyAlaskan pipeline remained shut following a weekend leak.

The market also gained support from data showing crudeoil stockpiles fell more than expected in the United States,the world''s biggest oil-consuming nation.

Some traders believe that oil could soon strike USD100 per barrel for the first time since October 2008.

"100 dollars could yet become a self-fulfillingprophecy with attention back on the broader market andpositive momentum spilling over," added Kryuchenkov.

"The euro is the driver here despite the restart tothe pipeline, even though it initially triggered the latestupswing.

"Sure, US crude inventory draws over the past weeks aswell as colder than usual weather were supportive, but sparecapacity is still plentiful with OPEC supplying excessiveamounts." (AFP)

Please Wait while comments are loading...