Perth: Oil prices rose towards $86 a barrel on Monday, buoyed by a drop in the US dollar and bullish data that showed Chinese crude imports jumping to their second-highest monthly level in March.
Euro zone finance ministers approved a giant €30-billion ($40 billion) emergency aid mechanism for debt-plagued Greece on Sunday but stressed Athens had not requested the plan be activated yet.
The news drove the euro to its highest levels in nearly a month in Asian trade, while the dollar index fell 1.1% against a basket of currencies on Monday.
US crude for May delivery rose 60 cents to $85.52 a barrel by 0123 GMT. The contract settled down 47 cents at $84.92 a barrel on Friday, posting a tiny 5-cent gain on the week. London Brent crude gained 68 cents to $85.51.
A weaker dollar tends to support oil prices, making dollar-denominated commodities cheaper for other currency holders.
“The weaker US dollar and positive Chinese trade data are the two main supporting factors,” said David Moore, an analyst at the Commonwealth Bank of Australia.
China’s strong demand for oil and copper showed no let-up in March, with imports rising rapidly despite higher prices as factories returned to work in earnest after the long Lunar New Year holidays.
Crude imports by China jumped 13.8% from the previous month and reached 4.95 million barrels a day, preliminary data released by the General Administration of Customs showed on 10 April. March’s oil import levels were just a touch below December’s record 20.9 million tonnes.
Analysts at Barclays Capital said oil prices have convincingly broken out of the $70-$80 a barrel range and could rise towards $90 a barrel as the global economy continues to regain its strength.
“The follow-through in the recovery in coming months may well be one element behind the creation of a base for a further shift up in prices,” Barclays analysts led by Paul Horsnell said in a report.
“The very limited recent increases in prices seem justified; indeed, they are perhaps remarkably modest given the pace of global recovery over the past two quarters in particular.”
Looking ahead, traders were expected to keep a close eye on the yuan-dollar relationship.
China, the world’s second-largest consumer, has pegged the yuan near 6.83 per dollar since mid-2008 to help its exporters weather the global crisis. For more stories on the US-China friction over the yuan, see.
Some think a revaluation would boost China’s oil demand in the short term as it will make dollar-denominated crude cheaper for Chinese buyers.