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Oil tops $85, climbs for 3rd month on economic recovery

Oil tops $85, climbs for 3rd month on economic recovery
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First Published: Fri, Apr 30 2010. 09 03 AM IST
Updated: Fri, Apr 30 2010. 09 03 AM IST
Singapore: Oil rose on Friday, heading for a third straight monthly gain as optimism about the global economy outweighed high inventories, Greece’s fiscal troubles, Iceland’s volcanic eruption and a lawsuit against Goldman Sachs.
Global markets staged a relief rally on Thursday as Greece moved to enact severe austerity measures to secure an aid package, easing fears that the debt crisis will spread across Europe. That boosted the euro and fueled the biggest jump in equities since early March.
“We did see heightened risk aversion across markets at the beginning of this week and that was triggered by the events that have been unfolding in Europe, but it seems that the market in the last 48 hours has discounted some of that uncertainty and we have seen risk appetite come back,” said Toby Hassall, an analyst at CWA Global Markets in Sydney.
US crude for June delivery rose 42 cents to $85.59 a barrel at 0311 GMT, less than $2 from an 18-month high of $87.09 reached on 6 April. April is set to be the first month since September 2008 when the front-month contract traded continuously above $80 a barrel.
“We did see towards the end of March and early April a number of sessions of sharp gains, when we broke out of a range that we were trading at for months,” Hassall said. “It’s the ongoing flow of data suggesting that the economic recovery was continuing on track.”
Euro zone sentiment jumped more than expected in April, data showed on Thursday, pointing to a strengthening economy in the second quarter, while the number of U.S. workers submitting new claims for unemployment benefits fell slightly last week.
Greece readied severe austerity measures on Thursday to secure a multi-billion-euro aid package and avoid debt default. International Monetary Fund, European Union and European Central Bank officials are in Athens to negotiate the bailout and hope to wrap up a deal within days in an effort to prevent the debt crisis from sinking other fragile EU countries.
ICE Brent crude for June gained 20 cents to $87.10.
Standard & Poor’s this week lowered Greece’s credit rating to junk status and also downgraded Portugal and Spain.
US federal prosecutors in New York have begun investigating Goldman Sachs Group Inc, raising the possibility of criminal charges against the company or its employees, a source familiar with the situation said on Thursday.
A three-day US Senate standoff over efforts to overhaul financial regulation ended on Wednesday as Republicans dropped efforts to block a Democratic bill in exchange for a handful of concessions.
“We’ve still got uncertainty regarding European credit, the Goldman Sachs case and US legislators being pushed to reform markets, but we are seeing economic data from the US and other parts showing that the recovery is continuing,” Hassall said.
The eruption of a volcano in Iceland in mid-April sent an ash plume across most of northern Europe, almost paralysing the continent’s skies for as long as six days in some areas, curbing jet fuel demand.
Crude stored the Cushing, Oklahoma pricing point and delivery hub rose by 1.2 million barrels to 36.8 million barrels in the week to 27 April, according to a report Thursday from energy industry data provider Genscape. That was the highest level since the company began to report them in May 2009.
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First Published: Fri, Apr 30 2010. 09 03 AM IST