Oil rose to the highest in almost two weeks after the U.S. Federal Reserve cut the cost of emergency dollar funding for European banks as part of a coordinated response to the continent’s sovereign-debt crisis.
West Texas Intermediate crude jumped as much as 1.9 percent after the Fed said in a statement that the joint action with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank was undertaken to ease strains on financial markets and help foster economic activity. The dollar index declined 0.7 percent.
“News that the Fed and five central banks lowered interest rates on U.S. dollar swaps weighed heavily on the dollar, with a result of a strong rally in crude oil prices,” Myrto Sokou, a London-based analyst at Sucden Financial Ltd., said by e-mail.
Crude for January delivery rose as much as $1.85 to $101.64 a barrel and was at $101.22 in electronic trading on the New York Mercantile Exchange at 1:49 p.m. London time.
Brent oil for January settlement was up 68 cents at $111.50 a barrel on the London-based ICE Futures Europe exchange, having earlier dropped 1.1 percent. It closed yesterday up 1.7 percent at $110.82.
The European benchmark contract’s premium to New York’s West Texas Intermediate was at $10.28 a barrel, compared with yesterday’s close of $11.14 and a record $27.88 on Oct. 14.
Oil rose earlier in the session after China cut the amount of cash that banks must set aside as reserves for the first time since 2008 as Europe’s debt crisis dims the outlook for exports and growth.
U.S. companies added more workers than anticipated in November, easing concern the job market is stagnating in the third year of the nation’s recovery, according to a private report based on payrolls.
The 206,000 increase was the biggest this year and followed a revised 130,000 gain the prior month, Roseland, New Jersey- based ADP Employer Services said today. The median forecast of economists surveyed by Bloomberg News called for an advance of 130,000.
U.S. crude inventories rose to 339.2 million barrels as imports surged 10 percent in the week to Nov. 25, the API report showed. An Energy Department report today will probably show supplies increased 50,000 barrels, according to the median of responses to a Bloomberg News survey.
Gasoline stockpiles slipped 173,000 barrels to 209.4 million, according to the API. Distillate fuels, including diesel and heating oil, gained 1.35 million barrels to 139.5 million. Oil-product imports rose 8.5 percent, the group said.
Analysts in the Bloomberg survey predicted the Energy Department will say motor-fuel supplies climbed 1.45 million barrels while distillates declined 1.25 million. The department is scheduled to release its inventory data today at 10:30 a.m. in Washington.
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