MW: Crude rallies on dollar weakness, European economic data
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Oil futures rallied Thursday, as better-than-expected economic data from Germany and France as well as dollar weakness buoyed demand for crude.
Light sweet crude for September delivery rose $1.88, or 2.7%, to $72.04 a barrel in electronic trading on Globex.
Germany and France unexpectedly returned to growth in the second quarter, official data showed Thursday, boosting expectations that the 16-nation euro zone will soon emerge from a prolonged recession. Read more.
The data "further fueled optimism that oil demand will increase," said Nimit Khamar, analyst at Sucden Financial Research.
"The better-than-expected European data has also seen the euro appreciate against the dollar, which has further supported crude prices," Khamar wrote in a note to clients.
In the currency markets, the euro and the British pound rallied against the dollar, boosting dollar-denominated commodities.
The dollar index (DXY 78.38, -0.41, -0.52%) , which tracks the greenback against a trade-weighted basket of six major currencies, fell to 78.342 from 78.771 in Wednesday trading.
"Furthermore, the U.S. Federal Reserve spurred optimism of an economic recovery by commenting that economic activity is leveling out," said analysts at Commerzbank.
"The oil price continues its decoupling from sustained weak fundamental data," they wrote in a research note.
Traders on Wednesday shrugged off a bigger-than-expected rise in crude supplies for the latest week. That rise included an increase at Cushing, Okla., the delivery point for Nymex crude futures.
Also on Globex, September reformulated gasoline rose 5.51 cents, or 2.7%, to $2.0804 a gallon, and September heating oil gained 3.89 cents, or 2%, to $1.9310 a gallon.
September natural gas futures rose 0.6% to $3.501 per million British thermal units.
At 10:30 a.m. Eastern Time, the Energy Information Administration will report data on natural gas in storage. Analysts polled by Platts expect an addition of 65 billion to 69 billion cubic feet for the week ended Aug. 7. IHS Global Insight is projecting a storage increase of 62 billion cubic feet.
