Oil prices firm after Spanish bond auction

19th April 2012, Comments 0 comments

World oil prices rose Thursday after recent losses after a successful Spanish bond auction eased concerns that a return of the eurozone debt crisis could hit economic growth.

Brent North Sea crude for June gained 34 cents to $118.31 per barrel.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in May added just two cents to $102.69.

"We had another successful Spanish auction today ... and that pushed crude oil prices higher after (Wednesday's) sell-off," said Sucden analyst Myrto Sokou.

Spain paid a higher borrowing rate in a key auction of 10-year bonds Thursday but managed to keep it below the psychologically key level of six percent.

Overall, Spain's Treasury raised a higher-than-expected 2.541 billion euros ($3.3 billion) in an issue of two- and 10-year bonds, topping the target of 2.5 billion euros.

Investors had been nervously waiting for the result of the auction, fearing that a flop could unleash new attacks on Spain's sovereign debt, reigniting the eurozone debt crisis and thereby ravaging global energy demand.

Prices fell on Wednesday after figures showed a much larger-than-expected increase in crude inventories, indicating weak demand in top global consumer the United States.

US crude stocks jumped 3.9 million barrels in the week ending April 13. That was more than four times market expectations for a gain of 900,000 barrels.

Elsewhere, the credit agency firm Fitch Ratings warned that oil prices could pressure sovereign ratings of major economies and firms if they see a further spike.

"The biggest risk to ratings is of a shock oil price rise that leads to sustained higher prices," it said in a commentary.

"The US economy would be damaged in the short and medium terms if oil prices were to remain higher than $150 per barrel. The greatest impact would be felt on some global corporates and transportation-based infrastructure issuers."

Meanwhile, new claims for US unemployment benefits inched lower last week, government data showed Thursday in a report casting a cloud on the recovery in the labour market.

The Labor Department reported 386,000 initial jobless claims were filed in the week ended April 14, a decrease of 2,000 from the prior week. But the prior week's estimate was revised higher, to 388,000 from 380,000. Most analysts had forecast claims dropped to 375,000 last week.

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© 2012 AFP

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