Oil prices jump on weak dollar amid easing Greek crisis
Crude oil prices soared on Thursday, in line with rising equity markets and a weaker dollar, as the energy market was boosted by the easing Greek debt crisis, traders said.
London's Brent North Sea crude for June delivery climbed 1.28 dollars to 87.43 dollars per barrel.
New York's main contract, light sweet crude for June, surged 2.07 dollars to 85.29 dollars a barrel.
VTB Capital analyst Andrey Kryuchenkov said that oil prices spiked higher because of the "euro rebound and receding risk aversion as policy makers seek to reassure markets over Greece's financial troubles".
European stock markets rallied Thursday, aided by upbeat company results and overnight US gains, and the euro pulled away from recent lows as Germany appeared to relax its opposition to a Greek bailout.
Greek equities rocketed 7.14 percent higher after officials said that talks on a major EU-IMF bailout loan were nearly complete with Athens being called to take tough new measures.
The European single currency meanwhile advanced to 1.3233 dollars, one day after striking 1.3115 -- which was the lowest level since late April 2009.
The weaker US currency makes dollar-priced oil cheaper for buyers using stronger units, like the euro, and therefore this tends to lift demand and prices.
Oil had risen on Wednesday in a late rally, one day after being rocked by the Greek financial crisis and the strengthening dollar.
The market had clawed back ground after the US Federal Reserve's Federal Open Market Committee (FOMC) held interest rates at ultra-low levels, further stimulating the economy, which is a top consumer of oil.
Prices 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 to 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 added.
"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.
© 2010 AFP