U.S. Oil Rises Despite European Woes

NEW YORK, June 14 (Xinhua) -- U.S. crude oil price rose on Thursday despite the continuing European debt woes, as investors hoped for more stimulus policies from the Federal Reserve.

Oil prices moved higher in line with equities after the Labor Department said the U.S. consumer price index fell 0.3 percent in May, the first decline in two years and that initial jobless claims rose for five of the last six weeks.

Investors bet that the low inflation rate and struggling jobs market will push the Fed to work out more stimulus plans.

Last week, Fed Chairman Ben Bernanke said the central bank was "prepared to take action" if the economy deteriorates, given the " subdued" inflation outlook. But he said the Fed was still assessing the situation and would not make any decision until next week's policy meeting.

In Europe, the debt woes continued to weigh heavily. Spain's 10- year bond yield breached the dangerous level of 7 percent on Thursday after ratings agency Moody's cut its credit ratings a day earlier. It was the first time in euro-era history for this yield to hit 7 percent, which was seen by markets as too expensive for a sovereign to borrow over the long term.

Meanwhile, Italy's 3-year bond yield rose to 5.30 percent at Thursday's auction amid weak confidence. Fears of Greece's " collapse" were also mounting as the Sunday election was nearing.

At OPEC's Vienna meeting, the oil cartel decided to keep the current output targets unchanged at 30 million barrels a day for the second half of 2012, although some of its member states expressed concerns over the cheap oil.

Light, sweet crude for July delivery climbed 1.29 dollars, or 1. 56 percent to settle at 83.91 dollars a barrel on the New York Mercantile Exchange. ICE Brent crude for July delivery, which expired after the settlement, last traded flat around 97 dollars a barrel.