Crude oil gains in afternoon U.S. trade

Forexpros – Crude oil futures moved higher in U.S. trade Friday, as investors held out hopes for solid progress on European debt and rising equities helped to fuel expectations of increased energy demand.

On the New York Mercantile Exchange light, sweet crude futures for December delivery traded at USD87.67 a barrel in mid-day U.S. trade, climbing 1.85%, after hitting a daily low of USD85.96.

Finance ministers from the euro-zone’s 17 nations convened in Brussels Friday to discuss boosting the current USD607 billion European Financial Stability Facility, but a rift remained between Germany and France on how best to maximize the fund’s impact.

France has pushed for the use of additional money to come from the European Central Bank, while Germany argued that such a move would violate an EU treaty prohibiting the financing of governments.

Investors cautiously welcomed statements from France and Germany Friday that firm details of a rescue plan for the euro-zone would be forthcoming in the next few days.

Elsewhere, the death of longtime Libyan leader Moammar Gadhafi, prompted the African nation’s oil officials to announce that production in the Sirte region of the country, Gadhafi’s stronghold, could soon restart its nearby Mabruk oil field capable of producing 50,000 barrels a day.

Libya had been producing about 1.6 million barrels a day nationally until the outbreak of civil war but unrest brought a halt to nearly all oil exports.

Analysts at Barclays Capital noted that output should rise to about 600,000 barrels a day by the end of the year but that “the road to the return to prewar levels remains a treacherous one.”

Meanwhile, BP Plc. announced it had received permission from the U.S. Interior Department to begin oil exploration in the deep waters of the Gulf of Mexico, the first approval since the firm’s Macondo well disaster last year that caused the worst offshore spill in U.S. history.

A falling U.S. dollar contributed to buying enthusiasm for oil futures, as dollar-denominated futures contracts tend to rise when the dollar falls.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was higher by 0.06% to 70.06.

On the ICE Futures Exchange Brent oil futures for December delivery rose 0.53% to trade at USD110.34.