Oil prices spike as dollar weakens on eurozone debt deal

October 28, 2011 | 09:21

(0) user say

The EU debt deal Thursday sent oil prices climbing in parallel with the euro, helped as well by better-than-expected economic growth in top consumer the United States.

New York's main oil contract, WTI light sweet crude for delivery in December, jumped $3.76 to $93.96 a barrel.

Brent North Sea crude for December delivery gained $3.02 to $111.93.

Europe's leaders came to the euro's rescue Thursday with a deal on a one-trillion-euro bailout fund for the region and for banks to share the pain of bailing out Greece.

That sent the European single currency flying above $1.42 for the first time in eight weeks.

A stronger euro usually sparks oil prices, which are denominated in dollars, higher.

Meanwhile the first official estimate of third quarter US economic growth came in at 2.5 per cent, quelling fears of a double-dip recession in the world's largest economy.

"It looks like the market likes quite a lot of what the European governments said," said Bart Melek, a commodities specialist at TD Securities.

"We have taken out the possibility for now that we are going to have a major recession globally; now we are going to have potential growth," he said.

"The agreement ... spread encouraging signs across the markets, giving strong upside momentum to the euro against the dollar and pushing crude oil prices higher," said Sucden oil analyst Myrto Sokou.

"It seems that the market found some relief after all the uncertainty and nervous trading conditions in the last few weeks," she told AFP.

AFP

What the stars mean:

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