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Oil Rises on ECB Decision
Sep 16,2011 09:00CST
industry news
Source:SMM
Crude prices rose on Thursday as the European Central Bank (ECB) said it would lend more U.S. dollars to European banks.

NEW YORK, Sept. 16 (Xinhua) -- Crude prices rose on Thursday as the European Central Bank (ECB) said it would lend more U.S. dollars to European banks, with Brent climbing nearly 3 percent, while U.S. crude price's gains limited by U.S. weak data.

The ECB decided to provide U.S. dollar liquidity to euro-area banks in a series of three-month loans starting from Oct. 12, in coordination with the U.S. Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank.

This move came in as Europe's ongoing debt crisis has spilled over to the bank sectors and has made market access to the U.S. currency difficult, which weighed heavily on the crude markets.

Investors were encouraged by this move and shrugged off a bunch of U.S. weak data including more-than-expected weekly initial jobless claims, a manufacturing contraction in the New York region and the significant growth slowdown of overall industrial production in August.

The euro also got boosted by the ECB's decision, rising 1 percent against the dollar. The dollar index, as a result, dipped about 0.7 percent. A weakening dollar made the greenback- denominated oil less expensive for investors who hold foreign currencies and bolstered the demand.

Light, sweet crude for October delivery rose 0.49 dollars, or 0. 55 percent to settle at 89.40 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for October delivery jumped 2.94 dollars, or 2.62 percent to close at 115.34 dollars a barrel.

 

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