NEW YORK (Reuters) - Oil prices rose on Thursday as comments from German Chancellor Angela Merkel that appeared to back the European Central Bank’s efforts to combat the euro zone crisis lifted equities, pressured the dollar and fed hopes for more economic stimulus from central banks.
Expiring front-month September Brent crude rose after seesawing much of the session. Nearby Brent contracts posted gains and front-month U.S. crude hit a three-month peak.
Brent and U.S. crude remained on pace to post their third consecutive weekly gains.
Escalating geopolitical tensions over Syria’s civil conflict and the dispute over Iran’s nuclear program, along with falling North Sea production and hopes that central banks will provide more stimulus, have combined to push oil higher.
While U.S. stocks moved up after the Merkel headlines, world equities rose to near 3-1/2-month highs following hints that China is eyeing new support for its economy. Lackluster U.S. data weakened the dollar, supporting commodities denominated in the U.S. currency. <MKTS/GLOB>
“Oil got a pop on the Merkel comments, as did stocks, and the dollar is weaker and U.S. crude got some follow-through buying after pushing above yesterday’s high,” said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Connecticut.
Brent September crude, expiring at the end of Thursday’s session, was up 47 cents at $116.72 a barrel at 2:19 p.m. EDT (1819 GMT), after rallying to $117.03, highest intraday price since May 3.
Brent October crude gained 59 cents at $114.90 a barrel, with the deficit to the front-month contract back up near $1.80 late in the session, after dropping to $1.47 intraday.
U.S. September crude was up $1.08 at $95.41 a barrel, having reached $95.67, the highest intraday price since mid-May.
Separate reports showed U.S. initial jobless claims rose last week, housing starts fell in July and the Philadelphia Federal Reserve’s business activity index still in negative territory, indicating contraction, for the fourth straight month.
While initially slipping on the disappointing economic news, the possibility that the weak data might spur the U.S. Federal Reserve to provide monetary stimulus to support the economy pressured the dollar against the euro and lifted crude futures.
Additional reporting by Christopher Johnson and Jessica Donati in London, and Manash Goswami and Elizabeth Law in Singapore; Editing by Dale Hudson