Oil prices rally on weaker dollar

April 21, 2012 | 08:14

(0) user say

World oil prices rallied on Friday, supported by rising European stock markets and a weaker dollar as investors drew comfort from a successful Spanish bond auction and upbeat German data.

World oil prices rallied, supported by rising European stock markets and a weaker dollar as investors drew comfort from a successful Spanish bond auction and upbeat German data.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in May added 78 cents to $103.05.

Brent North Sea crude for June gained 76 cents to $118.76 per barrel in London late afternoon deals.

"Crude oil prices rebounded on Friday... tracking gains in the European equity markets, especially after the successful Spanish debt auctions results," said Sucden analyst Myrto Sokou.

"Brent crude oil climbed higher above $119 per barrel, while WTI crude oil traded around $103 per barrel, supported by the softer US dollar against the euro.

"Due to the absence of major economic data today, we expect a quiet trading session with low volumes while currency movements might give some direction."

Sokou added: "However, investors should remain cautious as the economic situation across the eurozone look fairly fragile at the moment."

The European single currency rose against the dollar on the back of rising German business confidence and following Spain's bond auction on Thursday.

The weaker US unit makes dollar-priced crude cheaper for buyers using stronger currencies and this tends to stimulate demand and spark higher oil prices.

Spain -- one of the eurozone's debt-strapped economies -- paid a higher borrowing rate in a key auction of 10-year bonds on Thursday but managed to keep it below the psychologically key six percent level.

Rates above 6.0 percent are generally perceived to be unsustainable over the longer term.

"Eurozone worries eased on strong investor demand for Spanish bonds and as the recent price slump encouraged fresh buying," Phillip Futures said in a market commentary.

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional