Thursday, May 27, 2010

Crude Oil Jumps More Than $3 as China Reaffirms Support for the Euro

Crude oil surged more than $3 a barrel as equities and the euro rallied after China affirmed its commitment to investing in Europe. Oil climbed 4.3 percent as China denied as “groundless” a report that it’s reviewing euro holdings and the nation’s sovereign wealth fund said it’s maintaining European assets. The euro gained 1.5 percent against the dollar, boosting the appeal of commodities as an alternative to the U.S. currency. “If China were really looking to offload euro denominated debt, that would put downward pressure on the euro, and the euro/dollar rate has been one of the key factors in oil prices,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington.

Crude oil for July delivery rose $3.04 to settle at $74.55 a barrel on the New York Mercantile Exchange, the biggest one day increase since Sept. 30. Futures have climbed 17 percent in the past year. The euro rose to $1.236 at 3:15 p.m. in New York, compared with $1.2178 yesterday. It was the first increase in the euro in four days. The Standard & Poor’s 500 Index gained 2.8 percent to 1,097.55, and the Dow Jones Industrial Average surged 237.53 points, or 2.4 percent, to 10,211.98. “The big news is U.S. macroeconomic data is still solid,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “Growth is the story”....Read the entire article.

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