Crude-oil prices rallied sharply today, rising above $104 for the first time since dropping by over $20 on Wednesday.
Positive news flow from Europe and the UK helped lift market sentiment. Also talks of a boost to the IMF firepower eased worries about a slump in oil demand. Higher US equity markets helped maintain appetite.
Germany’s Ifo Institute’s index of business confidence released today showed a rise to 109.9 in April from 109.8 in March. UK retail sales for March rose 1.8 percent from February, which was much higher than the 0.8 percent increase that was forecast.
Meanwhile, a weaker US dollar was also the driver behind higher oil prices, since oil is prices in US dollars. So it makes oil cheaper for buyers in other currencies.
In New York trading hours, crude hit a high of $104.26 barrel, rising well off yesterday’s low of $101.65.
Commodity markets were focused on developments in Europe today but oil prices could resume their decline next week on speculation that the US economic recovery will slow, reducing demand for crude. Next week will be an important one for risk markets as they head toward another FOMC meeting. On Wednesday we have FOMC economic projections. A dovish tone will be negative for oil prices.