Oil prices rally above 81 dollars

2nd August 2010, Comments 0 comments

World oil prices topped 81 dollars on Monday, striking levels last seen in May, with sentiment boosted by soaring global stock markets, strong bank results and solid US economic data.

New York's main contract, light sweet crude for delivery in September, jumped as high as 81.72 dollars, touching a level last seen on May 5. It later stood at 81.36 dollars, up 2.41 dollars from Friday's close.

Brent North Sea crude for September leapt to 81.17 dollars, before pulling back slightly to 80.80 dollars, up 2.62 dollars from Friday.

Prices rallied "in line with European stock markets" and were "fuelled by optimism over the strength of the economic recovery," analysts at PVM Oil Associates said in a research note to clients.

Global stock markets charged higher on Monday as investors applauded strong profits from HSBC and BNP Paribas.

HSBC gained 5.26 percent in London after reporting that first-half profit more than doubled to 6.76 billion dollars (5.17 billion euros) as it slashed bad debt in the United States and grew earnings in key emerging markets.

In Paris, BNP Paribas jumped 5.27 percent as the French bank reported an unexpectedly strong second-quarter net profit of 2.1 billion euros (2.7 billion dollars), up 31 percent and way above analyst forecasts.

European markets got another boost in afternoon trade as Wall Street took off, with the blue-chip Dow Jones Industrial Average soaring after news that the US manufacturing sector expanded for a 12th straight month in July.

The Institute of Supply Management July manufacturing index fell to 55.5 points from 56.2 percent in June, but this was well above market estimates for 54.2 percent. A reading above 50 indicates an expanding manufacturing sector.

Oil traders meanwhile shrugged off downbeat economic news in China, which is the world's second biggest energy-consuming nation after the United States.

The official China Federation of Logistics and Purchasing showed on Sunday that manufacturing activity slowed in July, but remained in positive territory with a reading of 51.2 -- for an overall decline it would have to be below 50.

On Monday, an HSBC China Manufacturing PMI, or purchasing managers' index report, suggested a contraction in July, with a reading of 49.4.

© 2010 AFP

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