On Wednesday, the central banks of Europe, the United States, Britain, Canada, Japan and Switzerland reduced the rates that banks must pay to borrow money. Oil prices were further boosted to above $101 a barrel when China confirmed it would loosen its monetary policy. The Wall Street Journal reported Wednesday that China had been trying to tackle inflation by slowing its economy, which would cut demand for oil in the nation that has been the “engine of growth for global oil demand growth.” China is second only to the U.S. in oil consumption.
The AP reported Thursday:
The moves sparked a jump in global equities, which oil traders closely watch as a barometer of overall investor sentiment. The Dow Jones industrial average soared 4.2 percent on Wednesday and most Asian stock markets rose sharply Thursday.
Signs of weak U.S. crude demand kept prices from rising further. The Energy Department’s Energy Information Administration said Wednesday that oil and gasoline supplies grew last week, as imports rose and refineries slowed down because of weak demand.
“The bearish shocker was the whopping 5 million barrel build in distillate stocks that was much above our expected unchanged level,” energy consultant Ritterbusch and Associates said in a report.
Natural gas, the AP noted, rose 1.8 cents, to $3.57 per 1,000 cubic feet.
The WSJ, however, reported about noon Friday that while it appeared the oil futures rally would continue on a drastic drop in U.S. unemployment to 8.6 percent, those gains may be curbed on news of a stronger dollar.
Light, sweet crude for January delivery was up two cents to $100.22 a barrel in midday trade on the New York Mercantile Exchange. The contract traded as high as $101.56 a barrel earlier in the session.
Brent crude on ICE Futures Europe was up 19 cents, or 0.2%, to $109.18 a barrel.
Futures lost their earlier momentum after the dollar advanced to fresh session highs against the euro. Investors abandoned the single currency as rumors swirled over an imminent downgrade of Spain's sovereign-debt rating.