Oil prices higher

29th April 2010, Comments 0 comments

Oil prices rose on Thursday, in line with firmer equity markets and supportive data, as traders kept one eye on developments surrounding the Greek debt crisis.

London's Brent North Sea crude for June delivery rose 71 cents to 86.87 dollars per barrel.

New York's main contract, light sweet crude for June, gained 81 cents to 84.03 dollars.

Oil rose Wednesday in a late rally, one day after being rocked by the Greek financial crisis and the strengthening dollar.

As markets prepared to close, news trickled in that the US Federal Reserve's Federal Open Market Committee (FOMC) had kept interest rates at ultra-low levels, further stimulating the economy.

Oil also won support after the US Department of Energy (DoE) said American crude reserves increased by 1.9 million barrels in the week ending April 23, well above market expectations for a gain of around 800,000 barrels.

"Crude oil prices recovered some ground (Wednesday), supported by positive DoE data and increased confidence over US economic prospects," wrote Barclays Capital analysts in a research note for clients.

Traders were eagerly watching Europe's reaction to Greece's mounting difficulties as debt markets punish Athens, traders said, while Spain on Wednesday saw its rating downgraded amid fears of contagion.

"On the macro front, concerns over southern Europe's debt problems remain at the forefront," Barclays Capital analysts wrote.

"Outside Europe however, the flow of economic data and news has stayed supportive and the improving tone of (Wednesday's) FOMC statement in particular, helped restore some confidence in the market."

Pointing to a slightly quickening economic recovery, the Fed said labor and housing markets showed glimmers of improvement and spending had ticked up.

"Economic activity has continued to strengthen and ... the labor market is beginning to improve," the FOMC said.

Aside from Greece and the US interest rate decision, traders tracked an enormous oil leak in the Gulf of Mexico.

A BP executive on Thursday agreed with a US government estimate that the oil leak could be pumping up to 5,000 barrels a day of crude into the ocean, far more than previously thought.

British energy giant BP, which leases the rig and has been leading the response to the disaster along with the US Coast Guard, had earlier said they believed the flow of oil to be 1,000 barrels a day.

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© 2010 AFP

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