Crude futures rise $1/bbl on hopes over ECB measure

06 September 2012 11:44  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures rose on Thursday, rising by more than $1/bbl at one stage, on expectations that the European Central Bank (ECB) will reveal plans for a new bond purchasing programme to address the eurozone debt crisis.

At 10:25 GMT, October Brent crude on London’s ICE futures exchange was trading at $114.05/bbl, up by 96 cents/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $114.36/bbl, up by $1.27/bbl.

October NYMEX light sweet crude futures (WTI) were trading at $96.42/bbl, up by $1.06/bbl from the previous close. Earlier, the US benchmark rose to a session high of $96.62/bbl, up by $1.26/bbl.

ECB president Mario Draghi is expected to announce plans to buy bonds of the heavily debt-laden eurozone nations such as Spain and Italy in order to reduce their borrowing costs, which have risen to unsustainably high levels.

Borrowing costs for 10-year Spanish bonds are presently around 6.42%, while Italy’s 10-year bond costs are currently around 5.51%. Levels above 7% are viewed as unsustainable and likely to require the ECB and other organisations to provide loans.

Traders also await the release of US August employment data on Friday.

Weak data may encourage the US Federal Reserve consider a further round of quantitative easing to stimulate the US economy.

($1 = €0.79)

By: James Dennis
+65 6780 4327

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