Oil prices extend rally

29th November 2011, Comments 0 comments

World oil prices rose on Tuesday on investor optimism over the eurozone crisis after an Italian bond auction seen as successful and on stubborn worries over new sanctions against Iran.

New York's main contract, light sweet crude for delivery in January rose 80 cents to $99.01 a barrel.

Brent North Sea crude for January rallied $1.36 to $110.36 in late morning London deals.

The Italian Treasury raised 7.5 billion euros ($10.05 billion) in bonds set to expire in 2014, 2020 and 2022. Analysts said it was a good amount, despite falling short of the target of 8.0 billion euros.

The eurozone member nation's borrowing rates also shot up to a new high above the 7.0-percent warning threshold that stoked investor fears that Italy was set for a bailout.

In reaction, the European single currency jumped $1.3442, touching the highest level since November 23 in late morning London deals.

VTB Capital analyst Andrey Kryuchenkov said that the "successful Italy auction ... and the rallying euro helped US dollar-denominated crude futures".

The weaker greenback makes dollar-denominated crude cheaper for buyers using other, stronger currencies. In turn, that tends to boost oil demand and prices.

Markets were also keeping a close eye on Iran, which is the second biggest OPEC oil producer after kingpin Saudi Arabia.

EU nations were expected to unveil more sanctions against Iran at a foreign ministers' meeting on Thursday, after a report by the UN atomic energy watchdog strongly suggested Tehran was researching nuclear weapons.

Oil prices had risen on Monday as the euro rebounded on swirling speculation over a bailout of indebted Italy and a new overall eurozone crisis deal.

© 2011 AFP

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