Oil prices climb as traders eye Libya crisis
NEW YORK—Oil prices rose on Tuesday, lifted by gains on financial markets on hopes of new US economic stimulus and as traders monitored the crisis in oil-rich Libya.
New York’s main contract, West Texas Intermediate (WTI) light sweet crude for October delivery climbed $1.02 to close at $85.44 a barrel.
In London trade, Brent North Sea crude for October delivery settled at $109.31 a barrel, an increase of 95 cents from Monday.
Investors appeared optimistic that US Federal Reserve chairman Ben Bernanke will unveil new measures to kick-start the stalling economy in a speech on Friday.
“Oil is getting a bid here in the last couple of days,” said Rich Ilczyszyn, at MF Global.
He said that prices were finding support from a weaker dollar, better-than-expected China manufacturing data and the Fed’s pledge this month to hold ultra-low interest rates for two more years.
“We are also waiting for a (Bernanke) statement on Friday, and I think commodities are pricing in some open-door policy to maybe some type of quantitative easing,” or bond purchases by the central bank.
Speculation that the Fed could launch a third round of quantitative easing, after wrapping up a $600 billion QE2 in June, pressured the dollar. A weaker dollar helps to make dollar-priced commodities more attractive to buyers using stronger currencies.
Oil also benefited from rebounds on equity markets as fears eased slightly about US and European debt problems and a sluggish global economy.
“We have a little bit of stabilization in the global economy,” said Tom Bentz, at BNP Paribas. “At least the bad news has subsided for a few days, so the markets are taking that positively.”
In Libya, where rebels captured Moammar Gadhafi’s compound Tuesday but fighting continued, Bentz said the market believes “at some point Gadafi’s regime is falling.”
“The belief is that you’ll see more Libyan crude back on the market, maybe in a few months.”
