Brent up for seventh session on stimulus, dollar weakness
NEW YORK — Brent oil rose for a seventh straight session on Friday, hitting four-month peaks and heading for weekly gains along with US crude on expectations for stronger global demand after the Federal Reserve launched an aggressive stimulus programme.
The dollar fell against most currencies, dropping to a four-month low versus the euro and extending its slide after the US Fed’s Thursday announcement of a third bond-buying programme.
A weaker US currency is usually supportive to dollar-denominated commodities such as oil and industrial feedstock copper, which jumped to a four-and-a half-month peak.
Equities also received a lift from the US central bank’s action, with US stocks moving up and European shares jumping to a 14-month high.
Escalating anti-US protests over a film demonstrators consider blasphemous to Islam kept the geopolitical risk of supply disruption in North Africa and the Middle East in focus, along with the dispute over Iran’s nuclear program.
Front-month November Brent crude rose $1.26 to $117.14 a barrel by 11.10am EDT (3.10pm GMT). It hit $117.95, the highest since prices touched $118.45 on May 3.
Brent was on track for a 2% weekly gain.
US October crude, on pace for a 3% weekly rise, was up $1.25 at $99.56 a barrel. US crude reached $100.42, its first time over $100 since and the highest price since it touched $102.72 on May 4.
"The Fed will be indirectly adding more liquidity into the asset markets and that money will need to go somewhere and part of it will go into commodities, even if current commodity prices are already at demand-destruction levels," said Olivier Jakob at Petromatrix in Zug, Switzerland.
Highlighting the risk to the economy from surging oil prices, a jump in gasoline costs pushed up US consumer prices in August at the fastest pace in more than three years and squeezed spending on other items, threatening to slow economic growth.
Industrial production at the nation’s factories, mines and utilities dropped 1.2% in August, the biggest decline since March 2009. The consumer price index increased 0.6%, the first rise in five months and the biggest since June 2009.
Gasoline prices, which also recorded their largest increase since June 2009, accounted for about 80% of the rise in consumer inflation last month, according to a Labour Department report.
In contrast to those cautionary reports, US consumer confidence unexpectedly improved in early September as Americans anticipated better economic and employment prospects, but the cheery attitudes could be temporary, a survey showed.