Oil prices rally on hopes of eurozone plan

10th October 2011, Comments 0 comments

Oil prices rallied Monday in line with stock markets after French President Nicolas Sarkozy and German Chancellor Angela Merkel vowed a lasting and swift response to the eurozone debt crisis.

New York's main contract, light sweet crude oil for delivery in November, gained $1.37 to $84.35 a barrel.

Brent North Sea crude for November jumped $1.03 to $106.91 in midday London trade.

"Today the modestly bullish sentiment (in the oil market) has continued on the back of (Sunday's) French-German announcement that they would bring forward plans for the solution of the euro debt crisis before the end of the month," said Westhouse Securities analyst Peter Bassett.

Sarkozy and Merkel vowed Sunday to respond to Europe's debt crisis within weeks after holding crucial talks in Berlin over the weekend.

Without announcing concrete details, Sarkozy said there would be "lasting, global and quick responses before the end of the month" amid growing fears of another crippling global credit crunch.

In reaction, the euro and European stock markets bounced higher on investor hopes of a resolution to the stubborn eurozone crisis.

The statement from Europe's two most influential countries to support its debt-laden lenders had reassured traders, said Victor Shum, an analyst at Purvin and Gertz energy consultants in Singapore.

"Though no specific details were given, market sentiment became more optimistic because of the news," he told AFP.

Prices were also lifted by data last Friday showing an unexpected increase in US non-farm jobs.

The world's largest oil consumer created 103,000 jobs in September, far higher than forecasts for 60,000, while figures for July were revised up to 127,000 from the 85,000 initially estimated, while August was revised from zero to 57,000.

© 2011 AFP

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