Oil prices rally on stimulus hopes

Oil prices rallied yesterday as hopes of a Chinese stimulus soared after manufacturing activity in the world’s largest energy consumer fell to a nine-month low in August, analysts said. Brent October crude rose $ 1.23 to $ 116.14 a barrel at 1512 GMT, having reached $ 116.38. An upcoming maintenance-related slide in North Sea oil production and heightened Middle East tensions helped Brent hit a three-month peak at $ 117.03 a week ago as its September contract headed to expiration and went off the board at $ 116.90 a barrel, the highest settlement since May 2. Brent has recovered from a low of $ 88.49 posted on June 22 after retreating from the 2012 peak at $ 128.40 hit on March 1. New York’s main contract, light sweet crude for October rallied to $ 98.29 per barrel, reaching a summit last seen on May 4. It later stood at $ 97.71, up 45 cents from Wednesday’s closing level. “The ‘great stimulus hope’ rally continues, aided by persistent dollar weakness,” Sucden analyst Jack Pollard told AFP. The weaker greenback makes dollar-priced oil cheaper for buyers using stronger currencies. Oil markets, which have also been buoyed by hopes of additional stimulus from the US Federal Reserve, were given a further boost from heightened optimism that China’s central bank would do the same. “Energy markets have been pretty sluggish, given the renewed hopes of QE3 from the Fed. They needed an excuse to rise and they found it today in weak China flash PMI data,” said IG Markets Singapore strategist Justin Harper. From arabnews