Oil prices lifted by French strike

18th October 2010, Comments 0 comments

Oil prices rose sharply on Monday as trade on Wall Street gained some momentum and an ongoing strike in France threatened to disrupt European supplies.

New York's main contract, light sweet crude for delivery in November, gained 1.83 dollars to 83.08 dollars a barrel, paring Friday's sharp declines.

London's Brent North Sea crude for December added 1.92 dollars to 84.37 dollars.

Wall Street was trading in positive territory on Monday on the back of a robust earnings report from Citigroup and a report showing home-builder confidence improved.

"We saw a turnaround in the equity market which is lending some support. Prices bounced back really with a return of risk appetite," said analyst Matt Smith of Summit Energy.

Prices were also under pressure as France said it had activated an emergency government crisis cell charged with maintaining fuel supplies amid a strike that has shut down refineries and blocked storage depots.

French petrol distributors said separately that pumps were starting to run out, with the UIP estimating that 1,500 out of 4,000 major service stations were affected.

Most of France's oil refineries shut down production last week as part of a nationwide movement against plans to raise the retirement age from 60 to 62, and protests escalated Monday with truck drivers blocking access to depots.

The dollar also renewed on Monday its decline against the euro, trading at 1.3994 dollars, as traders increasingly expect the US Federal Reserve to resume asset purchasing in order to boost the economy.

A weak greenback makes dollar-denominated commodities like oil cheaper for buyers holding rival currencies, thereby boosting investor demand. When the dollar strengthens, the opposite occurs.

© 2010 AFP

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