By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures turned higher Thursday after the European Central Bank said it would lend more U.S. dollars to European banks, stoking hopes the region is on the mend.
News that U.S. industrial production rose in August compared to expectations of a flat reading also helped oil.
Crude oil for October delivery CL1V +0.97% added $1.12, or 1.3%, to $90.02 a barrel on the New York Mercantile Exchange, near session highs. It had traded as low as $88.01 during Asian and European trading hours.
Th ECB will provide U.S. dollar liquidity in coordination with the U.S. Federal Reserve, the Bank of England, Bank of Japan, and the Swiss National Bank. Read more on European Central Bank actions.
The operations will be conducted in addition to the ECB’s ongoing weekly seven-day dollar operations announced in May 2010.
The move comes amid worries about European banks and their liquidity as investors bet on a spillover from the euro zone’s sovereign debt crisis into the private sector.
Closer to home, August’s industrial output in the U.S. rose 0.2%, while analysts had expected flat readings, the Federal Reserve said. Read more on industrial output.
Investors also got a taste of September’s business activity.
The Philadelphia Federal Reserve said its manufacturing index was at -17.5 in September, the third negative read in four months. Analysts expected a reading of -13.4 for the month.
Earlier, the New York Fed said its Empire State manufacturing index fell to -8.8 in September from -7.7 in August.
Applications for unemployment benefits rose last week to the highest in nearly two months, the Labor Department said earlier on Thursday.
Oil fell 1.4% in the previous North American session. Read more about Wednesday’s oil moves.
Reassurances by France and Germany that they would continue to stand behind Greece buoyed Asia equity markets on Wednesday. Sentiment was also encouraged by Greece’s reported conviction that it would meet the obligations under its debt agreements, diluting the likelihood of a disorderly default.
But the euro-zone debt situation remains highly uncertain, with the focus turning to a meeting of European Union finance leaders to be held on the weekend, which will also be attended by U.S. Treasury Secretary Timothy Geithner.
Meanwhile, the dollar turned weaker, with the dollar index DXY -0.60% , which tracks the greenback against a basket of six other currencies, declining to 76.335 from 76.825 in late North American trade on Wednesday. Read more about currencies.
A higher dollar tends to discourage investment in dollar-denominated crude oil, as it makes the commodity more expensive to holders of other currencies.
