Oil prices rose sharply this afternoon, boosted by a combination of positive macroeconomic data and hopes that G20 finance ministers will make progress in finding a solution to the euro zone debt crisis at their two day meeting, which has kicked off in Paris today.
In addition, the US dollar dropped against other major currencies today as demand for safe haven assets faded ahead of the G20 summit. Weakness in the greenback made the dollar-denominated crude cheaper for holders of other currencies, lifting demand.
Today’s inflation data that came out of China offset yesterday’s disappointing update that showed slowing growth in the world’s second largest energy consumer’s exports.
China’s official inflation report showed that growth in consumer prices slowed from 6.2 percent in August to 6.1 percent last month, giving investors hope that China will loosen its monetary policy after hiking its interest rates three times this year to curb inflation.
A more relaxed monetary policy would likely boost economic activity in China and stimulate its energy demand.
Meanwhile, US data was mixed as while the Commerce Department said that retail prices climbed 1.1 percent last month, the University of Michigan’s consumer confidence index fell from 59.4 in September to 57.5 this month.
US light, sweet crude for November delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rallied US$2.61 to US$86.84/barrel in morning trade in New York.
November Brent crude surged US$2.81/barrel to US$112.36/barrel on the ICE Exchange this afternoon.
Today’s top risers in the oil and gas sector were:
BowLeven (LON:BLVN), up 49 percent at 112.75 pence at midday
Xtract Energy (LON:XTR), up 11.5 percent at 1.48 pence
Gold Oil (LON:GOO), up 6 percent at 2.65 pence
Ascent Resources (LON:AST), up 5.5 percent at 2.58 pence
Chariot Oil & Gas (LON:CHAR), up 5 percent at 132 pence
The top fallers were:
Nighthawk Energy (LON:HAWK), down 15.5 percent at 2.81 pence at midday
3Legs Resources (LON:3LEG), down 11 percent at 140 pence
Trap Oil (LON:TRAP), down 6 percent at 26.5 pence
Europa Oil & Gas (LON:EOG), down 5 percent at 10.2 pence
Pantheon Resources (LON:PANR), down 4 percent at 11.27 pence
Oil climbs ahead of G20 meeting
Published: 10:32 14 Oct 2011 EDT