Oil prices mixed after central bank action, US data

30th November 2011, Comments 0 comments

Oil prices were mixed on Wednesday as traders digested a move by central banks to avert fresh financial crisis and following data showing unexpected rises in US energy inventories.

Investors also tracked geopolitical unrest in major oil exporter Iran and news that commodities-hungry China had surprisingly cut its bank reserve requirement ratio.

New York's main contract, light sweet crude for delivery in January, rose 90 cents to $100.73 a barrel.

Brent North Sea crude for January fell 29 cents to $110.53 in late London deals.

The world's biggest central banks on Wednesday moved suddenly to provide banks with funds and prop up the global financial system in a dramatic effort to turn back the runaway eurozone crisis.

The central banks of the eurozone, Canada, Britain, Japan, United States and Switzerland said in a joint statement they were lowering the cost of providing dollars to banks in a move that pushed stock markets worldwide through the roof.

Also on Wednesday, the United States said that its crude stockpiles jumped by 3.9 million barrels last week, while analysts had forecast a drop of 500,000. Distillates, which include heating fuel, also spiked, indicating weak demand for energy in the world's biggest economy with winter approaching.

Ahead of the data, China's central bank said it would cut the reserve requirement ratio for the country's banks by 0.5 percent, effectively increasing the amount of money banks can lend.

The move, which takes effect on December 5, is a sign that the government in the world's biggest energy consumer is easing tight credit restrictions put in place to curb surging inflation and property prices.

Crude prices were meanwhile winning support from tensions over Iran.

Britain on Wednesday expelled Iranian diplomats and shut its embassy in Tehran after the mission was attacked by protesters angry at fresh sanctions against the Islamic republic's nuclear programme.

Foreign Secretary William Hague also accused the Iranian government of tacit support for Tuesday's attack, although he said London would not be cutting off diplomatic ties altogether.

The incursions and Britain's response dramatically heighten tensions between the West and Iran over Tehran's nuclear programme, which it insists is for civilian rather than military purposes.

© 2011 AFP

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