Thursday, August 16, 2012

Oil up on stimulus hopes, Middle East tensions

NEW YORK (Reuters) - Oil prices rose on Thursday as comments from German Chancellor Angela Merkel that appeared to back the European Central Bank's efforts to combat the euro zone crisis pressured the dollar and fed hopes for more economic stimulus from central banks.

Expiring front-month September Brent crude seesawed in thin-volume trade, while nearby Brent contracts moved higher and front-month U.S. September crude hit a three-month peak.

Brent and U.S. crude remained on pace to post their third consecutive weekly gains.

Escalating geopolitical tensions over Syria's civil conflict and the dispute over Iran's nuclear program, along with falling North Sea production and hopes that central banks will provide more stimulus, have combined to push oil higher.

While U.S. stocks moved up after the Merkel headlines, world equities rose to near 3-1/2-month highs following hints that China is eyeing new support for its economy. Lackluster U.S. data weakened the dollar, supporting commodities denominated in the U.S. currency.

"Oil got a pop on the Merkel comments, as did stocks, and the dollar is weaker and U.S. crude got some follow-through buying after pushing above yesterday's high," said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Connecticut.

Brent September crude, expiring at the end of Thursday's session, was up 1 cent at $116.26 a barrel at 1:01 p.m. EDT (1701 GMT). It earlier reached $116.66, stalling ahead of the previous day's $116.72 intraday peak.

Brent October crude gained 34 cents at $114.65 a barrel, with the deficit to the front-month contract near $1.55 a barrel after rising above $2 this week.

U.S. September crude was up 88 cents at $95.21 a barrel, having reached $95.38, the highest intraday price since mid-May.

(Additional reporting by Christopher Johnson and Jessica Donati in London, and Manash Goswami and Elizabeth Law in Singapore; Editing by Dale Hudson)

Source: http://news.yahoo.com/brent-crude-stays-above-116-supply-woes-stock-033541583--finance.html

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