Forexpros – Crude oil futures were up sharply on Thursday, as market sentiment was boosted after European leaders made a breakthrough in resolving the region’s two-year old debt crisis.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD92.03 a barrel during European morning trade, surging 2.03%.
It earlier rose by as much as 2.25% to trade at a daily high of USD92.43 a barrel.
French President Nicolas Sarkozy said early Thursday that European leaders reached an agreement with banks to take a 50% writedown on the face value of their Greek debt holdings, easing pressure on the debt-laden country.
Additionally, the firepower of the European Financial Stability Facility, the region’s bailout fund, will be increased, though they did not say how the money would be provided.
German Chancellor Angela Merkel said she was “very satisfied” with the outcome.
The news saw investors move in to riskier assets, such as commodities and stocks, and shed traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, was down 0.65% to trade at 75.94.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Wall Street investment bank Goldman Sachs said Wednesday that global oil supply is “extraordinarily tight,” creating the risk that prices will exceed forecasts.
In a report published Wednesday, the bank said that, “Restrictions on output growth in Libya and Iraq, two of the main sources of additional production, will strain the availability of oil next year.”
Meanwhile, oil traders were awaiting a report on U.S. gross domestic product for the third quarter scheduled for release later in the day to gauge the economic strength of the world’s largest oil consumer.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery jumped 1.58% to trade at USD110.64 a barrel, with the spread between the Brent and crude contracts widening to USD18.61 a barrel.
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