OIl Prices Up > Sharply!
7th June 2012
Oil prices rose sharply on Wednesday June 6, 2012, rebounding from recent lows as traders took their cue from soaring global stock markets and continued nuclear concerns over key crude producer Iran.
In late afternoon London deals, Brent North Sea crude for July rallied $2.01 to $100.85 per barrel.
New York's main contract, West Texas Intermediate crude for delivery in July gained $1.60 to $85.89.
"A slight brightening of sentiment on the financial markets and a weaker US dollar are putting wind in the sails of oil," said Commerzbank analyst Carsten Fritsch.
European and US stock markets shot higher Wednesday, with sentiment helped by the European Central Bank's decision to keep cash flowing to beleaguered eurozone banks even if it left interest rates on hold.
ECB chief Mario Draghi downplayed the eurozone debt crisis after the central bank held rates unchanged at 1.0 percent, saying it was unlike the situation after the 2008 Lehman Brothers bankruptcy sent global markets into a tailspin.
"To a great extent we know exactly what (the) problems are now," the ECB president said, adding: "I don't think the situation is at all as bad as it was."
Prices were also buoyed after G7 European leaders vowed Tuesday to respond "speedily" to the debt crisis.
Traders meanwhile shrugged off news of a smaller-than-expected decline in stockpiles in the United States, the world's biggest oil consuming nation.
US American crude inventories fell by just 100,000 barrels in the week ending June 1, far less than market expectations for a drop of 400,000 barrels, according to analysts polled by Dow Jones Newswires.
Elsewhere, the European Union called Wednesday on Iran to sign an accord with the International Atomic Energy Agency that would enable the UN watchdog to verify the nature of its controversial nuclear activities.
IAEA chief Yukiya Amano said after visiting Iran in May that Tehran would soon sign a deal to allow greater access to sites, documents and people involved in its nuclear programme -- but no such agreement has yet emerged.
"We call on Iran to conclude the agreement without further delay," the EU told the IAEA board of governors meeting in Vienna this week.
"The EU has once again to stress the importance of granting early access to all sites, persons and information as and when requested by the agency," the statement said, making particular reference to a military base at Parchin.
The IAEA, which is holding a new round of talks with Iran in Vienna on Friday, has been seeking access to the Parchin base near Tehran, where it believes suspicious explosives testing has been carried out.
Key crude producer Iran has denied the IAEA demands, insisting the site is of no significance to its nuclear programme.
Earlier this week, the oil market hit multi-month lows as dismal data sparked fears over the health of the global economy and future energy demand.
In Monday trade, New York crude hit $81.21, a level last seen on October 7. Brent oil meanwhile tumbled to $95.63, reaching its lowest level since January 2011.
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