Oil prices rally on US earnings, eurozone hopes

October 25, 2011 | 08:22

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World oil prices jumped Monday in line with buoyant equity markets as sentiment was lifted by solid US company results and growing hopes of a resolution to the eurozone debt crisis later this week.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in December, added $3.95 to close at $91.35 a barrel.

Brent North Sea crude for December gained $1.92 to settle at $111.45 in London trade.

The market took encouragement from apparent progress in Europe on a plan to contain the Greek debt crisis, as well as encouraging economic data from China.

Manufacturing activity in China hit a five-month high in October, HSBC said Monday, easing fears of a hard landing in the world's second-largest economy.

The preliminary HSBC purchasing managers' index stood at 51.1 in October, up from 49.9 in September and the first time the PMI has gone above 50 since June, the bank said.

"Crude oil prices continued the upside momentum, supported by stronger-than-expected economic data from China and (the) eurozone that boosted market confidence and... risk appetite," noted Sucden analyst Myrto Sokou.

Ratings firm Standard & Poor's gave the energy bulls a boost as well in a report on oil and gas industry credit.

"We believe that a weak but gradually improving economy will support strong oil prices plus marginally higher prices for natural gas," S&P analyst Thomas Watters said, forecasting a price of $98.50 for WTI in 2012.

"Despite oil trading near $100 at times, consumers haven't cut back much on driving. This has sustained gasoline and diesel demand and kept refineries operating at high rates," the report said.