London: Brent crude rose for the seventh straight session on Friday, climbing towards $118 a barrel on hopes for stronger global demand for oil after the US Federal Reserve launched an aggressive programme to stimulate the economy.
Brent rose $1.67 to $117.55 a barrel by 3:36pm, after reaching a four-month peak of $117.95 in earlier trade. The global North Sea benchmark is on track to end the week up more than 2%.
US crude rose $1.82 to $100.13 a barrel after hitting a four-month high of $100.42. It is set to close the week up 3%.
“The Fed will be indirectly adding more liquidity into the asset markets and that money will need to go somewhere and part of it will go into commodities, even if current commodity prices are already at demand destruction levels,” said Olivier Jakob, at Petromatrix in Zug, Switzerland.
The Fed’s decision to tie its third bond-buying programme directly to economic conditions was an unprecedented step that marked a big escalation in its efforts to drive down US unemployment.
The US dollar on Friday fell to a four-month low against the euro due to the Fed action. Losses in the dollar can support dollar-denominated commodities such as oil by making them cheaper to consumers using other currencies.
Oil was also boosted by escalating anti-US protests over a film demonstrators consider blasphemous to Islam.
Protesters attacked the US embassies in Yemen and Egypt on Thursday, and the United States sent warships towards Libya, where the US ambassador was killed in related violence this week. Demonstrations have also taken place in Kuwait, Iran, Bangladesh, Tunisia, Morocco and Sudan.
“The Middle East premium is starting to be thrown into the oil price a little bit, adding about $5 to the price,” said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
“A lot of the dissident parties will use the film as a means to promote more unrest. As a result of that, I see it continuing for a while.” Reuters
