BUSINESS

Oil lifts near US$90 a barrel as fears subside about Greece, European banks

09/15/2011 01:43 EDT | Updated 01/12/2012 02:11 EST
NEW YORK, N.Y. - Oil climbed near US$90 per barrel Thursday on some potentially positive developments in Europe.

The European Central Bank said it will provide banks with enough cash to make lending easier. The ECB co-ordinated its efforts with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to offer three-month dollar loans to banks through the end of this year.

Fears of a Greek bankruptcy also subsided as France and Germany reaffirmed their support for the country, insisting that it remains an "integral" part of the eurozone. Greece relies on emergency funds from the European Union.

The news pushed the greenback lower. And oil, which is priced in U.S. currency, tends to rise as the dollar falls and makes barrels cheaper for investors holding other currencies.

Benchmark crude added 77 cents to US$89.68 a barrel by midday in New York while Brent crude jumped $2.75 to US$112.40 in London.

"It's a dose of good news," independent analyst Jim Ritterbusch said. He warned, however, that Europe is far from solving its myriad economic problems.

Investors still worry that Greece's financial troubles will spread to its neighbours and further slowdown a eurozone economy that consumes almost 18 per cent of the world's oil.

Thursday's announcements out of Europe outweighed a slew of troubling economic reports released in the U.S.

The government said the number of people applying for unemployment benefits jumped last week to the highest level in three months. And industrial production ticked up 0.2 per cent last month, lower than July's 0.9 per cent increase.

The Federal Reserve Bank of Philadelphia also said manufacturing in the mid-Atlantic region contracted in September for the third time in four months.

In other commodities trading, heating oil rose 7.1 cents to US$3.016 a U.S. gallon (3.79 litres) and gasoline futures increased 5.69 cents to US$2.7827 a gallon. Natural gas fell 12.1 cents to US$3.918 per 1,000 cubic feet.

(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)