Forexpros – Crude oil futures extended sharp gains from the previous session on Tuesday, surging to a three-month high amid optimism that Wednesday’s European Union summit would result in a breakthrough in resolving the region’s debt crisis.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD92.55 a barrel during European morning trade, jumping 1.4%.
It earlier rose by as much as 1.74% to trade at USD92.98 a barrel, the highest price since August 3.
Crude prices rallied nearly 4.5% on Monday as market sentiment was lifted after European leaders neared a deal over the weekend on bank recapitalization, while France and Germany seemed closer to an agreement on a potential enhancement of the euro zone’s bailout fund.
Data showing that manufacturing activity in China rose to a five-month high in October provided further support. China is the world’s second largest oil consuming nation and manufacturing numbers are used as indicators for fuel demand growth.
Investors’ focus remained on Wednesday’s EU summit, which markets hoped would result in a viable solution to the region’s debt crisis.
Meanwhile, the U.S. National Hurricane Center said late Monday that Hurricane Rina, the sixth major storm of the Atlantic storm season, strengthened to a category two storm as it moved towards oil platforms in Mexico’s Yucatan Peninsula.
U.S.-based industry group Kinetic Analysis estimated the storm may shut 6.69 million barrels of oil produced by Petroleos Mexicanos, Latin America’s largest oil producer.
Energy traders track tropical storm activity in the event it disrupts production in the Gulf of Mexico, which is home to 29% of U.S. oil production.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery shed 0.2% to trade at USD111.12 a barrel, with the spread between the Brent and crude contracts narrowing to USD18.57 a barrel.
Brent prices came under pressure as oil traders continued to monitor developments in Libya in order to asses how quickly oil production in the country would return to pre-war levels, following the death of longtime Libyan leader Muammar Gaddafi on Friday.
Libya, Africa’s biggest holder of crude oil reserves, has the capacity to produce roughly 1.6 million barrels of crude a day. The country has produced approximately 100,000 barrels of oil per day since the civil war began in February.
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