Franco-German eurozone plan drives oil higher
Oil markets joined equities in rallies Monday after Germany and France agreed over the weekend to deliver a comprehensive solution to the eurozone public debt crisis within weeks.
New York's main contract, WTI light sweet crude oil for delivery in November, closed at $85.41 a barrel, a gain of $2.43 from Friday's closing level.
In London, Brent North Sea crude for November jumped $3.07 to settle at $108.95 a barrel.
Markets welcomed news that German Chancellor Angela Merkel and French President Nicolas Sarkozy, leaders of the eurozone's two most powerful economies, had agreed Sunday at a key meeting on a strategy to resolve the sovereign debt crisis.
After meeting with Merkel in Berlin, Sarkozy promised a "lasting, global and quick responses before the end of the month" to the eurozone debt crisis that is threatening to engulf banks and core euro countries.
Sarkozy did not provide any details.
"Another day, another bailout and yes, bailouts are bullish! Another plan to save Europe and rising expectations of the US economy has oil back on an upward track," said Phil Flynn at PFGBest.
Flynn said the New York oil market was still benefiting from a better-than-expected US jobs report published Friday, that showed the world's biggest oil-consuming nation added 103,000 jobs in September.
"The Sarkozy-Merkel meeting has calmed the market once again," said John Kilduff at Again Capital.
"We'll see skepticism creeping into the market but for now the markets are taking their word that they have a deal to sort this out," he added.
Meanwhile, Iraq announced that crude output was back to normal levels at the southern section of the country's biggest oilfield, after being temporarily halted by two bombings at a pipeline over the weekend.
JPMorgan analysts said in a note that the bombing "highlights one of the key risks to our forecast for rising OPEC production over the next two years.
"With limited spare capacity elsewhere in OPEC, the market needs higher production from Libya and Iraq to meet our forecast of 1.1 mbd demand growth next year and 1.4 mbd in 2013."
Anglo-Dutch oil giant Shell said Monday it had shut part of its production and may not meet contractual obligations on certain exports from Nigeria through December due to a sabotage attack on one of its pipelines.
© 2011 AFP