Oil hovers below $94, pausing 24-pct October rally
Friday, October 28, 2011
SINGAPORE (AP) — Oil prices hovered below $94 a barrel Friday in Asia after surging the previous session amid investor optimism Europe’s plan to contain its debt crisis will help boost global economic growth.
Benchmark crude for December delivery was down 34 cents at $93.62 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $3.76, or 4.2 percent, to settle at $93.96 in New York on Thursday.
Brent crude was down 40 cents at $111.68 a barrel on the ICE Futures Exchange in London.
Crude has surged about 24 percent from $75 on Oct. 4 on expectations Europe would be able to keep Greece’s soaring debt levels from mushrooming into a financial and economic crisis.
On Thursday, EU leaders announced a plan that will cut Greek debt and require bondholders to accept a 50 percent loss. The plan also included a (euro) 1 trillion ($1.39 trillion) bailout fund.
Global stock markets, which oil traders often look to as a barometer of overall investor confidence, jumped after the deal was announced. Equities in Asia also gained Friday.
The debt plan also helped boost the euro. A weaker dollar makes commodities less expensive for investors with other currencies. The euro was steady Friday at $1.4171.
“Markets gave an unequivocal vote of confidence to the summit deal,” energy consultant Cameron Hanover said in a report. “Clearly, the strength in the euro and in equities helped push oil prices higher.”
Easing fears that the U.S. economy will soon slip into recession has also helped push crude higher this month. The U.S. said Thursday its gross domestic product grew 2.5 percent in the third quarter, up from 1.3 percent growth in the second and 0.4 percent in the first.
“With so many observers fearing a retreat back into recession, the growth of 2.5 percent seemed remarkably robust,” Cameron Hanover said.
In other Nymex trading, heating oil fell 0.9 cent to $3.09 per gallon and gasoline futures slid 1.2 cents at $2.70 per gallon. Natural gas advanced 4.5 cents at $3.81 per 1,000 cubic feet.