Prices rally 2.5% as most markets heartened about upcoming summit
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures rallied Friday as guarded optimism about the euro zone and strong earnings in the U.S. helped pulled up most markets.
Crude for December delivery CL1Z +2.89% added $2.13, or 2.5%, to $88.26 a barrel on the New York Mercantile Exchange.
Investors cheered a statement from France and Germany promising to provide firm details of a rescue plan for the euro zone in the next few days. French and German leaders are due meet late Saturday in Brussels, in preparation for a summit of European leaders Sunday.
On Wednesday, a further meeting with be held to formally approve the solutions agreed to at the summit. Read more analysis of the European summit.
The oil market was also evaluating the impact of the death of former Libyan dictator Col. Moammar Gadhafi, who was killed by revolutionary forces in his hometown of Sirte on Thursday.
“The death of Gadhafi changes very little in the underlying dynamics of the oil picture on the ground,” strategists at Barclays Capital said.
Libya’s oil reserves are the ninth largest in the world, but production was subpar due to aging infrastructure. Most of Libya’s oil production pre-uprising, estimated to be between 1.6 million and 1.8 million barrels a day, ended up in refineries in southern Europe.
Brent oil, Europe’s benchmark oil futures, gained $1.71, or 1.6%, to $111.52 a barrel Friday on ICE Futures in London.
Libyan supplies were disrupted after war broke out in the nation earlier this year, but production has slowly ramped up as the fighting died down and workers could be safely sent in to repair damaged or neglected facilities. Read more on the outlook for Libyan oil.
“We maintain our view that while Libya can bring on (500,000 to 600,000 barrels per day) of production by the end of this year, and potentially a little more by the first quarter, the road to the return to pre-war levels remains a treacherous one,” Barclays Capital strategists said.
Meanwhile, other energy products tracked oil higher. November gasoline RB1X +1.86% rose 5 cents, or 2%, to $2.73 a gallon. November heating oil HO1X +1.31% added 4 cents, or 1.4%, to $3.07 a gallon.
A weaker dollar was also helping oil and other commodities on Friday.
The dollar index DXY -0.79% , which compares the performance of the U.S. currency against six major rivals, traded at 76.344, compared with 76.958 in North American trading late Thursday.
A weaker greenback is usually positive for dollar-priced commodities such as oil because it makes them less expensive to holders of other currencies.
The November oil lost 0.9%, to settle at $85.30 a barrel Thursday, when contract expired at the close of the Nymex session. See more on Thursday’s oil moves.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
