- POSTED: 11 Oct 2013 04:51
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Global oil prices rallied Thursday on hopes of a breakthrough deal to avert a disastrous US default, and on spiking geopolitical tensions in Libya.
NEW YORK CITY: Global oil prices rallied Thursday on hopes of a breakthrough deal to avert a disastrous US default, and on spiking geopolitical tensions in Libya.
US benchmark West Texas Intermediate for November delivery jumped US$1.40 to US$103.01 on the New York Mercantile Exchange.
European benchmark Brent oil for November delivery rose US$2.74 to US$111.08 a barrel.
The rise in oil came as equity markets surged in response to an emerging Republican proposal in Washington to offer a six-week extension of US borrowing authority.
President Obama is scheduled to meet with Republican leaders later Thursday.
"Both Brent and WTI have rallied off the back of the progress being made in Congress," Sucden analyst Kash Kamal told AFP.
"Republican House speaker John Boehner has suggested a plan for a six-week extension to the debt ceiling which has offered markets some respite."
However, John Kilduff, founding partner of Again Capital, said Thursday's gains could erode once the proposal gets scrutinized. For one thing, the initiative would not end the partial government shutdown, which has dragged down energy demand due to lost consumption from government workers and government fleets.
The overall budget situation "is going to have to be worked out for these gains to hold," Kilduff said.
The oil market also surged higher Thursday on simmering tensions in Libya.
Libyan Prime Minister Ali Zeidan was freed Thursday after being held by gunmen for several hours, in the latest sign of the country's lawlessness since Muammar al-Gaddafi's 2011 overthrow.
"Brent crude prices jumped sharply today after the detention and subsequent release of the Libyan Prime Minister sparked worries that another coup could be in the offing, raising concerns about further instability in the region," added CMC Markets analyst Michael Hewson.
Andy Lebow, a senior vice president for energy derivatives at Jefferies Bache, said the Libyan news "sent a shiver through the Brent market."