Crude oil prices stable after brief rally
World oil prices steadied on Monday after a brief rally, as traders took their cue from the eurozone debt drama, analysts said.
New York’s main contract, light sweet crude for delivery in November, added 34 cents to $87.14 a barrel.
Brent North Sea crude for delivery in December climbed as high as $113.86 a barrel, before retreating as traders took profits. It stood at $111.75 in midday London deals, down 48 cents from Friday’s closing level.
“Prices are still being driven mainly by optimism that a comprehensive solution to the eurozone debt crisis will be found in the near term,” said Commerzbank oil analyst Carsten Fritsch.
“The optimistic mood was further boosted at the weekend by the meeting of G20 finance ministers, stoking expectations accordingly for the EU summit this coming weekend.”
Europe vowed to its G20 partners on Saturday that it would take swift and decisive action to resolve a debt crisis that is threatening to drag the world economy back into recession.
French Finance Minister Francois Baroin, speaking after the meeting of G20 finance ministers and central bankers, said the eurozone would present answers as soon as next weekend, at a summit of EU leaders in Brussels on October 23.
Crude futures had also risen strongly on Friday as confidence grew that the G20 would put muscle into the eurozone rescue and US data showed signs of firming growth.
“Oil is moving on the economic outlook and the overall strength in commodity markets,” said Ker Chung Yang, commodity analyst for Phillip Futures in Singapore.
“It’s responding to the better outlook for US economic growth and speculation that we may be near some sort of resolution to the eurozone crisis,” he told AFP.
The gloomy US economic climate lifted a tad on Sunday when key Republican leader Eric Cantor said a congressional supercommittee would reach agreement on $1.5 trillion in government spending cuts by a November 23 deadline.
If a deal is reached before then, the United States can avoid triggering an automatic $1.2 trillion in cuts evenly distributed between military and non-military spending, which Pentagon officials warn would damage US interests.
The discussions had taken place under the shadow of a repeat of political stonewalling by the Republicans, who earlier in the year withdrew from talks with Democrats on lifting the US debt ceiling