| Oil prices surge For Stronger Stock Market |
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| Friday, 23 July 2010 10:27 | |||||||
Page 1 of 2 New York (AFP) - Oil prices jumped more than three percent in New York on Thursday local time, due to strong stock market and investors continue to monitor the possibility of a storm threat to oil operations in the Gulf of Mexico.
New York's main contract, light sweet crude for delivery in September, ending at 79.30 dollars per barrel, an increase of 2.74 dollars, or 3.5 percent, from the market close on Wednesday. North Sea Brent crude in London for September delivery rose 2.45 dollars to settle at 77.82 dollars per barrel. "As usual, this decline in the dollar and the stock market that pushed oil futures prices to the sky," said Antoine Halff of Newedge Group. Market momentum in oil prices "is financial," he said. "Uncertainty survive - a few participants have very clear views about the economic outlook." Shares sharply higher as Wall Street sentiment is driven by U.S. economic data and corporate earnings better than expected. Dow Jones Industrial Average climbed more than 200 points, or two percent, in the final hours of trading. European shares also rose, with London getting 1.90 percent, Frankfurt climbed 2.53 percent and Paris rose 3.05 percent at closing. Investors consider the report a better than expected on the troubled U.S. housing market, where sales of previously owned homes fell less than expected in June. Large U.S. companies AT & T, Caterpillar and 3M all posted profit above analyst projections, strengthening expectations of economic recovery. The U.S. currency weakened, especially against the euro, helped stimulate demand for dollar-priced oil and other commodities. Sentiment also got a boost from positive economic news in the 16-nation euro zone. The main indicator economic activity, purchasing managers index (PMI), compiled by data and research group Markit, rose an unexpected and official data showed the euro zone industrial orders jumped 3.8 percent in May from April. "Crude oil prices rebound ... supported by the weakening U.S. dollar and the rapid recovery in the stock market after economic data better than expected from the euro zone and UK," said Sucden analyst Sokou Myrto. He added: "It seems that investor sentiment has improved slightly after stronger-than-expected euro zone economic data, while the weakening U.S. dollar is currently providing support to the market." Traders also worried about a tropical depression forming in the Gulf of Mexico, where about 30 percent of U.S. oil production is located. "Storms can cause major disruption in oil supply and affect the wells and refineries," said Halff. The U.S. government ordered certain ships working in the Gulf of Mexico where oil leakage back into the harbor, amid fears that the storm could have forced mass evacuation and thwart attempts to obstruct the British giant BP oil wells in the Gulf. A full-scale evacuation could be delayed until the last two weeks of operations for the stoppage of wells, which had released millions of barrels of crude oil is one of the worst environmental disasters in U.S. history. (A026/K004)
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