EU optimism keeps Brent price above $111

With rising economy,US crude is also on track for its biggest weekly gain since February.

Brent crude slipped on Friday after rising nearly 3 per cent in the previous session,but optimism surrounding Europe’s rescue initiatives has kept prices firm above $111,while US crude is on track for its biggest weekly gain since February.

Prices were also buoyed by news the US economy grew 2.5 per cent in the third quarter,its fastest pace in a year,taking output back to a pre-recession level,as consumers and businesses stepped up spending,creating momentum that could carry into the last three months of 2011.

Although Brent crude was down 63 cents at $111.45 a barrel by 0318 GMT,prices have posted a weekly gain of almost 2 per cent. Prices have also pushed the front-month Brent 200-day moving average above $112.25 a barrel.

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US crude fell 66 cents to $93.30,but was headed for a weekly rise of 7 percent,its biggest gain since the week ended Feb. 27.

On Thursday,European leaders struck a deal with private holders of Greek debt to write down half their holdings and agreed to boost the region’s rescue fund.

You got an initial knee-jerk reaction yesterday with prices going up,and probably there’s some selling going on now based on the reality that it’s still a way to go to solve the problems,said Tony Nunan,a risk manager with Mitsubishi Corp. based in Tokyo.

When people have more time to look at it and analyse it,they will realise there are not a lot of details on the European Financial Stability Facility (EFSF),he said,adding that Italy’s problems remained an issue.

But crude oil prices still look healthy,he added.

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Technically and fundamentally,crude oil prices look good. The essential thing is that Europe delivered. Although there are still a lot of problems left,there was some kind of an outcome that was acceptable to the market.

Financial markets also rallied strongly in relief on Thursday following the deal.

US President Barack Obama said the deal had calmed global markets and it was now important the countries follow through on implementation of the pact.

Klaus Regling,chief executive of the EFSF,will meet officials in Beijing on Friday and hold a news conference.

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