Oil prices inch up ahead of ECB meeting3 min read . Updated: 02 Dec 2010, 04:43 PM IST
Oil prices inch up ahead of ECB meeting
Oil prices inch up ahead of ECB meeting
London: Oil prices inched up on Thursday, close to three-week highs of $87, as financial markets were supported by expectations the European Central Bank might unveil measures to contain the euro zone debt crisis.
Front-month oil prices were 10 cents up at $86.85 a barrel by 3:46pm, after encouraging private jobs data in top consumer the United States lifted prices by 3% in the previous session.
ICE Brent futures added 28 cents to $89.15.
Focus was on the European Central Bank’s monthly meeting, which is expected to keep unlimited liquidity operations in place for longer to support euro zone members grappling with debt problems, but is unlikely to announce new mass bond purchases.
European bourses rose ahead of the ECB announcement, while the euro was broadly unchanged, having jumped by more than 1% on Wednesday.
Rising unemployment figures in Spain were a timely reminder of the challenges that some euro zone members face, with jobless numbers going up in November for the fourth consecutive month; although jobless data from Denmark and France was broadly unchanged.
“The European crisis is yet another source of concern for us, as we do not think that -- even if new proposals are put forward -- consensus will be so easily attained," MF Global senior analyst Edward Meir said in a note, adding that the prospect of inflation-fighting measures in Asia was another concern.
Oil prices fell earlier in the session after a Chinese central bank adviser said that the country’s monetary policy will tighten steadily next year to counter inflation and excessive global liquidity.
“While we are still wary about going long a number of commodity complexes at these levels, the markets clearly feel otherwise, buoyed by the positive macro data that has been streaming out over the last two days," Meir said.
“For the time being, participants seem to be unconcerned by the consequences of these strong macro reports, namely, that central banks, particularly in Asia, will have to step up the pace of tightening in order to stave off inflationary pressures".
Oil prices are currently less than $2 away from a 25-month peak of $88.63 reached on 11 November.
“We seem to be close to the top of the trading range, so we will need something to push it through $90 and cold weather may not be enough," Christopher Bellew from Bache Commodities said.
Investment bank Goldman Sachs said US crude prices are likely to average $100 a barrel in 2011 and $110 a barrel in 2012 on the back of a “new structural bull market".
“We expect in 2011 and 2012 that the transition from a cyclical recovery to a new structural bull market will lead to new record annual average prices above the 2008 high of just under of $100 a barrel," Goldman said in a 1 December report.
On Wednesday, US crude oil inventories data from the Energy Information Administration showed weekly a surprise gain of 1.1 million barrels.
“The latest data from the US showed that oil inventories actually rose amid weakening consumption. This could pose a risk for prices and limit the upside potential in the coming days, despite the general improvement in market sentiment," Singapore-based Credit Suisse analyst Stefan Graber said.
US gasoline stockpiles rose in line with forecasts last week; while a weekly 937,000 barrel drop in East Coast gasoline stocks lifted gasoline futures to an almost seven-month high on Wednesday.
US private sector payrolls rose by the most in three years in November, lifting optimism about the job market ahead of Thursday’s weekly initial jobs claims reports and Friday’s monthly government employment report.
US non farm payrolls are likely increased for a second straight month in November, up 140,000, a Reuters poll showed. The gain would point to an acceleration in economic activity and a recovery that is becoming self-sustaining.