Tomahawk, WI 10/6/2011 (PennyPayDay) – Oil prices rose above $80 a barrel Thursday, continuing a rebound from 12-month lows on signs that European finance officials are moving to bolster the region's banks.
By early afternoon in Europe, benchmark crude was up $1.17 to $80.85 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $4.01, or 5.3 percent, to finish at $79.68 per barrel in New York on Wednesday.
In London, Brent crude was up 63 cents to $103.38 on the ICE Futures exchange.
Earlier in the week, oil dropped to the lowest level since September 2010 as Europe's financial crisis dragged on.
Experts are concerned that if heavily indebted Greece fails to pay its bills, it will spark a financial meltdown similar to the U.S. banking crisis of 2008.
But those fears eased after reports that the International Monetary Fund was pressing European leaders to quickly reinforce banks against worsening market panic.
Sentiment was further boosted after German Chancellor Angela Merkel said she would support a Europe-wide plan to recapitalize banks, if it was deemed necessary.
Stronger equity markets in Asia and Europe also helped lift crude prices, with investors often considering equities as a barometer of economic sentiment.
Hong Kong's Hang Seng index gained 5.7 percent Thursday, while London's FTSE 100 and Germany's DAX were both up around 2.2 percent.
Oil prices also were supported by Wednesday's release of data on U.S. stockpiles by the Energy Department's Energy Information Administration. Draws of 4.7 million barrels in crude stocks and of 1.1 million barrels of gasoline stocks contradicted analysts' expectations. But they said the positive effects of the stockpile data would likely be short-lived.
"In view of the prevailing threats to the economy, it is unlikely that the drop in inventories ... will have any lasting impact on oil prices," said a report from Commerzbank in Frankfurt. "Once concern about the economy gains the upper hand again, oil should come under renewed pressure."
In other Nymex energy trading, heating oil was up 1.65 cents at $2.7931 a gallon, and gasoline futures rose 2.56 cents to $2.5948 per gallon. Natural gas lost 1.4 cents to $3.556 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.