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Crude oil higher on euro zone optimism, easing speculation

Published 07/27/2012, 03:58 AM
Updated 07/27/2012, 04:00 AM
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Investing.com - Crude oil futures rose during European morning trade on Friday, following Thursday's upbeat comments from European Central Bank President Mario Draghi and as mixed U.S. economic data fueled speculation the Federal Reserve may implement further stimulus measures.

On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD89.86 a barrel during European morning trade, climbing 0.53%.

Sentiment found support after ECB President Draghi said on Thursday that the bank will do whatever is necessary to preserve the euro.

In a speech in London, Draghi appeared to indicate that the ECB would be prepared to intervene to lower Spanish and Italian bond yields, saying that government borrowing costs would fall within the central bank’s mandate if they interfered with the 'transmission' of monetary policy.

Meanwhile, the greenback remained under pressure as investors were eyeing data on second quarter U.S. gross domestic product, as a string of mixed economic reports on Thursday sparked fresh expectations for further easing measures by the Federal Reserve.

Industry data showed that pending home sales in the U.S. fell by 1.2% in June, disappointing expectations for a 0.2% increase, while  the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 21 fell to a seasonally adjusted 353,000, compared to expectations for a decline to 380,000.

Separately, official data showed that U.S. durable goods orders rose 1.6% in June, beating expectations for a 0.4% increase and following a 1.6% rise in May. The report also showed that core durable goods orders, which exclude transportation items, fell unexpectedly in June by 1.1%.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

In addition, the U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery rose 0.66% to trade at USD105.96 a barrel, with the spread between the Brent and crude contracts standing at USD16.10.


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