BLBG: Oil Rises Most in Three Weeks on Signs Economy Will Stabilize
Crude oil rose the most in three weeks on signs the world economy is stabilizing as leaders of the Group of 20 nations meet to address the financial crisis.
Oil surged as world leaders, meeting in London, neared an agreement to tighten rules on financial markets, crack down on tax havens and channel more cash to the International Monetary Fund. Energy prices also increased as the euro gained against the dollar, bolstering the appeal of commodities as an alternative investment.
“The equity and commodity markets have shaken off a lot dour economic news,” said John Kilduff, senior vice president of energy at MF Global Inc. in New York. “The fact that global leaders are close to an agreement on a coordinated response to the recession helps all the markets.”
Crude oil for May delivery rose $3.70, or 7.7 percent, to $52.09 a barrel at 9:09 a.m. on the New York Mercantile Exchange. Prices are up 17 percent so far this year.
The euro rose after the European Central Bank cut its benchmark interest rate less than economists forecast. The common currency climbed 1.2 percent to $1.3406 from $1.3249 yesterday.
“The ECB cut interest rates by less than expected and that’s given the dollar a real shellacking,” Kilduff said.
Goldman Sachs said Brent crude oil prices may reach $50 a barrel this year, up from an earlier estimate of $45, because of production cuts made by the Organization of Petroleum Exporting Countries.
Brent crude oil for May settlement rose $3.11, or 6.4 percent, to $51.55 a barrel on London’s ICE Futures Europe exchange.
