Oil prices shoot above 90 dollars

Source:AFP.com Author:Unknown Date:03/25/14 Click:

LONDON (AFP) - The price of oil jumped back above 90 dollars on Friday, helped by a recovery in global stock markets on the back of plans for a stimulus package to prevent the US economy falling into recession, traders said.

New York's main contract, light sweet crude for delivery in March, rose 1.54 dollars to 90.95 dollars per barrel.

Brent North Sea crude for March gained 1.76 dollars to 90.83 dollars.

"Crude futures were firmer, extending last night's rally," said Sucden analyst Andrey Kryuchenkov.

"Oil prices are continuing to follow gains on the broader market and especially on equity markets," he added.

Global stock markets continued their rebound Friday after a quick agreement by US leaders on a stimulus package for the troubled American economy.

Equities had spiked on Thursday after the US Federal Reserve earlier in the week slashed US borrowing costs by a huge 75 basis points to 3.50 percent, in an emergency and unprecedented move amid recession concerns.

"The commodities market will continue to look for signs of health in the US economy from equities and that will affect prices," said Tony Nunan from Mitsubishi Corp.

Despite recent gains, oil prices are still well off their early January historic highs of 100.09 dollars for New York's light sweet crude and 98.50 dollars for Brent.

"Oil will get support from stocks if they stay strong but may also get some support from China's GDP," said Phil Flynn at Alaron Trading.

China's economy grew 11.4 percent in 2007, reaching the highest level in 13 years and marking the fifth straight year of double-digit growth, the Chinese government said on Thursday. China demands vast amounts of oil to help power its economy, being second only to the United States as a consumer.

Nunan said the real focus remained on the United States economy.

"If the US economy goes down, the demand (for oil) from China will go down as well," he said.

Oil prices have slid from their record heights owing to fears that a US recession would severely dampen demand for crude.

Supply concerns meanwhile eased as the US Department of Energy announced Thursday that US crude inventories had risen by 2.3 million barrels in the week to January 18. Analysts had forecast a gain of 1.5 million barrels.

Elsewhere the oil market was looking ahead to next Friday's meeting of the OPEC oil-producing cartel in Vienna. Analysts expect the Organisation of Petroleum Exporting Countries to resist calls from oil consumers to increase output to help to bring down prices.

Analysts are even suggesting that OPEC may soon decide to cut output because its members are unhappy about earnings being reduced by oil price drops.

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