Oil Prices Rise As Dollar Down

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Oil Prices Rise As Dollar Down

Wednesday, 10 February 2010 09:51

New York - Oil prices turned up (rebounding) on Tuesday local time as the U.S. dollar weakened against the euro is stimulating tastes of risk, making crude cheaper for buyers using stronger currencies.
The main futures contract, New York, light sweet crude for March delivery, jumped 1.86 dollars to close at 73.75 dollars per barrel.

In London, oil, Brent North Sea crude for March delivery soared 2.02 dollars to settle at 72.13 dollars.

"Oil prices rebound amid signs of recovery in risk appetite," said Costanza Jacazio, an analyst at Barclays Capital.

"While this issue recently on the fiscal position of southern Europe and the negative implications for the pace of economic recovery in the region, at the global level, the recovery remains intact," Jacazio said, adding that oil demand data has been proven "generally supportive" for several weeks.

Antoine Halff of Newedge Group said that the increase Tuesday in the oil market is driven primarily by the value of foreign currency exchange.

Euro rebounded sharply against the U.S. currency, had more than 1.38 dollars amid speculation the European Union threshold will help

Greece solve a fiscal crisis after a lot of players bet against the currency in recent weeks, dealers said.

They said news that the President of the European Central Bank (ECB) Jean-Claude Trichet left the central bank governors meeting in Sydney early to attend an emergency economic summit of the European Union in Brussels on Thursday triggered the belief that a deal was done.

Economic Affairs Commissioner Joaquin Almunia, the European Union on Tuesday urged European leaders to offer "clear support" for Greece in exchange for real effort from Athens to solve the budget crisis.

A weaker dollar makes oil priced in dollars more attractive for buyers with stronger currencies.

"While the economy of oil price cut of non-dollar denominations are welcomed, the price of crude oil will remain relatively stable due to mature oil as an asset class and size of macroeconomic assessment," said Mike Fitzpatrick of MF Global.

Analysts say crude oil is also being supported by an increase in geopolitical risk after Iran, OPEC's second largest producer, announced on Tuesday began to enrich uranium further, ignoring the warnings of new sanctions from world powers who suspect the Islamic Republic's nuclear project is aimed at making bombs.

"We believe the events surrounding Iran has the potential to heat up the course in 2010, provides the potential for prices," said Barclays Jacazio.

The market also got a boost from the prospect of another fierce snowstorm in the U.S. East Coast, which will increase demand for heating fuels in the nation's largest energy consumer's world.

Department of Energy said after the market closed that reports weekly petroleum inventories, usually released on Wednesday, has been delayed by bad weather and will be released at 1700 GMT Friday.

Oil prices recovered slightly on Monday after a big seller last week, triggered by weak U.S. jobs data and debt issues in Europe. | Antaranews.com | tenderoffer.biz |