Oil climbs above 84 dollars

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World oil prices breached 84 dollars on Wednesday as European governments reopened their airspace to more flights following a shutdown caused by ash from an erupting volcano in Iceland.

Traders were meanwhile awaiting the latest weekly update on the state of energy stockpiles in the United States, which is the world's biggest energy consuming nation.

New York's main contract, light sweet crude for delivery in June, rose 56 cents to 84.41 dollars a barrel.

London Brent North Sea crude for June added 87 cents to 85.67 dollars per barrel.

"Oil prices rallied on the partial reopening of European airspace, which will improve demand for aviation fuel," said analyst Peter Bassett at Westhouse Securities.

Planes took to Europe's skies on Wednesday after the chaos caused by the Iceland volcano cloud.

Britain finally lifted a flight ban on its airspace late on Tuesday, following Belgium, France and Germany and others in easing restrictions introduced after the Eyjafjoell volcano spewed a huge dust cloud across the continent.

However, airlines face a massive challenge to shift the backlog of passengers.

Millions of people have been stranded across the globe since Europe began shutting down airspace on April 14, and airline schedules are in disarray after so many of their planes were grounded.

Crude futures had leapt by two dollars in New York trade on Tuesday, amid optimism about the state of the economy and the prospect of transatlantic air travel resuming.

Markets reacted to a pickup in jet fuel demand as planes increasingly took to the skies after the chaos of the past few days.

On Monday, oil had tumbled by almost two dollars amid concerns over fraud charges against Wall Street icon Goldman Sachs and the impact of the volcanic ash crisis.

However, the appearance of Goldman's stellar first-quarter earnings on Tuesday also helped soothe market concerns.


© 2010 AFP

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