Forexpros – Crude oil futures erased losses in choppy trade on Monday to trade at the highest level since early August as market sentiment continued to be dominated by developments surrounding the ongoing debt crisis in the euro zone.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD95.47 a barrel during early U.S. morning trade, jumping 1.29%.
It earlier rose by as much as 1.41% to trade at USD95.62 a barrel, the highest price since August 2.
Risk appetite found support amid speculation that Italian Prime Minister Silvio Berlusconi was about to step down amid mounting opposition from within his own party, ahead of a critical parliamentary vote on Tuesday.
The reports were subsequently denied by a spokesman for Mr. Berlusconi.
The U.S. dollar moderated gains against its major counterparts, boosting the appeal of commodities. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% to trade at 77.19, pulling back from the daily high of 77.59.
Meanwhile, Greek Prime Minister George Papandreou said German counterpart Angela Merkel expressed support for his decision to step down on Sunday, allowing the creation of a national unity government intended to secure international financing and avert a potential default.
Crude prices found additional support after Eric Rosengren, President of the Federal Reserve Bank of Boston said earlier that the Fed “must remain aggressive to combat the weak labor market”.
The comments added to speculation the Fed could introduce fresh stimulus measures to boost the U.S. economy after Fed Chairman Ben Bernanke said last week that an additional round of asset purchases was a “viable option”.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery rallied 2.3% to trade at USD114.53 a barrel, with the spread between the Brent and crude contracts standing at USD19.06 a barrel.
French lender BNP Paribas said in a report earlier that the spread between the two contracts can widen again to USD 20 per barrel or above in the near term, as an already tight market copes with disruption in supplies from Libya and the North Sea.
Earlier in October, the gap between the two contracts widened to a record USD27.88 a barrel, but the differential has narrowed in recent sessions as the EU’s debt crisis weighed on the Brent contract.
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