Crude oil prices extend gains

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Oil prices rose further on Friday, building on the previous day's surge, as investors awaited European banking stress test results for indications of the global economic outlook, analysts said.

New York's main contract, light sweet crude for delivery in September, increased by 19 cents to 79.49 dollars a barrel.

Brent North Sea crude for September added 11 cents to 77.93 dollars in morning deals.

Prices were meeting resistance at 80 dollars after soaring more than three percent overnight on rising US equities and a possible storm threat, said Ong Yi Ling, an investment analyst with Phillip Capital.

"I think that if you see an upside, it's pretty much capped. The European stress tests result is something that investors would really look at," Singapore-based Ong told AFP.

"General market sentiment is positive but because of the fact that it has been largely considered and possibly priced in, the risks on the downside would possibly be there."

Wall Street stocks rallied on Thursday as sentiment was boosted by forecast-busting corporate earnings from AT&T, Caterpillar and 3M.

Investors will next turn to the results of "stress tests" from the London-based Committee of European Banking Supervisors due later on Friday for a clearer picture of the region's economic outlook.

The tests conducted by national regulators on 91 European Union institutions that represent 65 percent of the EU banking sector are designed to assess the capacity of major European lenders to withstand economic or financial crises.

The crude market had raced higher on Thursday as stock markets rallied and investors kept an eye on a storm threat for oil operations in the Gulf of Mexico.

"Crude oil prices surged (on Thursday) as an array of strong economic data, robust corporate earnings results and continuing concerns over a tropical storm potentially hitting oil operations in the Gulf of Mexico area contributed to the strength of the energy market," said Sucden analyst Myrto Sokou.

"The weakening US dollar provided further support to the crude oil prices," she added.


© 2010 AFP

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