Oil prices rise after week-long slump

7th May 2010, Comments 0 comments

Oil prices rose on Friday, at the end of a week in which they have tumbled as the dollar pushed the euro to 14-month lows.

New York's main contract, light sweet crude for June delivery rose 74 cents to 77.85 dollars a barrel.

Brent North Sea crude for June delivery gained 56 cents to 80.39 dollars a barrel.

"The whole commodity complex is primarily driven (currently) by currency market volatility more than anything else," said VTB Capital analyst Andrey Kryuchenkov.

Oil prices slumped between late Monday and Thursday as the dollar struck 14-month highs against the euro on worries about the stability of the eurozone amid the Greek debt crisis.

They were also weighed down on Thursday by a stunning sell-off on US financial markets and news of rising oil inventories in the United States, indicating weakening demand in the world's largest energy consuming nation.

A stronger greenback makes dollar-denominated oil more expensive for holders of rival currencies, such as the euro, denting demand for energy.

Oil prices began the week strongly -- reaching a 19-month high of 87.15 dollars on concerns about a slick in the Gulf of Mexico and positive US economic indicators.

However worries that the Greek debt crisis may spread to other vulnerable eurozone economies and affect the global economy was dampening investor sentiment, analysts said.

"Concerns about the fiscal position of a number of European countries, and possible contagion effects, continue to fuel concerns about the international economic outlook," said analysts from the Commonwealth Bank of Australia.

"Oil markets have become less confident about the international economic outlook," they wrote in a commentary.

Meanwhile in the Gulf of Mexico on Friday, crews lowered a dome over the oil leak in a bid to contain the sea of crude moving perilously closer to the US coast.

The unprecedented operation is seen as the best hope in staving off the biggest US environmental disaster since the 1989 Exxon Valdez spill in Alaska.

The containment chamber is designed to cap oil discharge from the Deepwater Horizon oil rig operated by British energy giant BP that exploded on April 20, triggering the massive oil spill and killing 11 workers.

Since the explosion, nearly three million gallons of crude have spewed into the sea from a well below the rig.


© 2010 AFP

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