Oil soared above $84 dollars today to strike fresh 17-month highs in thin pre-holiday trade, driven by buoyant manufacturing data in China and the euro zone.
New York’s main contract, light sweet crude for delivery in May, climbed 70 cents to $84.46 a barrel. London’s Brent North Sea crude for May rose 74 cents to $83.44.
Manufacturing in the euro zone defied forecasts in March, hitting a 40-month high, according to a survey by data and research group Markit.
The euro zone’s purchasing managers’ index for the manufacturing sector rose 2.4 points from February to 56.6 points in March. In an estimate last week, Markit set the March index at 53.3 points. It is the sixth consecutive month in which the index has stood above the 50-point barrier, which signals a growth in manufacturing activity.
There was also positive news from the manufacturing sector in China, which is the world’s biggest oil consuming nation after the US. Chinese manufacturing picked up in March, government and HSBC surveys showed today, with the bank saying it could indicate an accelerating economy and raise chances of an interest rate hike.
Oil rallied sharply yesterday, driven by a weaker dollar, before paring gains on a report which showed a larger than expected build in US crude stocks.
US crude inventories rose by 2.9 million barrels in the week ending March 26 beating market expectations for a gain of 2.1 million barrels. Petrol reserves increased by 300,000 barrels while analysts had pencilled in a drop of 1.3 million barrels.
Analysts said yesterday’s gains were also buoyed by an International Energy Forum meeting that pledged greater cooperation and more transparency in tackling oil price volatility, seen as damaging to economic recovery.
It also agreed to strengthen dialogue between leading oil producers, such as Saudi Arabia and Russia, and key consumers including the US and China, in a bid to eliminate the risk of excessive price swings.
Meanwhile, US President Barack Obama has announced a plan to expand oil drilling off US coasts, drawing protests from green groups but charges by Republicans it did not go far enough.
The decision was a reversal of Obama’s early 2008 campaign strategy, when he argued that lifting curbs on offshore drilling would take years to have an impact and would not provide enough sufficient extra supplies to be justified.
The president’s plan, part of a comprehensive energy strategy, would see new tracts of the Atlantic off the Virginia coast opened to exploration, and expand leases for prospecting in the Gulf of Mexico off the coast of Florida.
Scientific research off Alaska in the Chukchi and Beaufort seas will also be authorised, but four pending lease sales in those waters that were approved under a plan of the former administration of president George W Bush will be cancelled.
Exploration will be barred in Bristol Bay in the eastern Bering Sea, a crucial habitat for sockeye salmon and other wildlife.
‘In the short term, as we transition to cleaner energy sources, we’ll have to make tough decisions about opening new offshore areas for oil and gas development in ways that protect communities and coastlines,’ Obama said.
Obama portrayed the decision as part of a comprehensive energy plan, designed to wean the US off foreign energy sources from volatile areas, and develop a new green economy.
‘The bottom line is this: given our energy needs, in order to sustain economic growth, produce jobs, and keep our businesses competitive, we’re going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy,’ he said.
The energy industry applauded the decision. In Mexico, where the International Energy Forum was meeting, Saudi Oil Minister Ali al-Nuaimi had positive words for Obama’s measure.
Approving new exploration areas was part of ‘good moves to increase supply of energy, which the world needs,’ Nuaimi said. He said that for the world to grow in the next 20 to 30 years ‘we need all sources of energy whether they are fossil fuels, renewable, wind, nuclear, biofuels’.
(source www.rte.ie)
