LONDON (Reuters) – Oil rose by more than a dollar to more than $68 a barrel on Thursday, boosted by a weak U.S. dollar and hopes that interest rate cuts in the U.S. and China would bolster the world economy.
Asian stock markets gained for a third day and European shares opened higher on signs that investors are rediscovering an appetite for risk in response to global efforts to prevent a deep recession.
“The financial picture is still leading oil prices with attention being drawn away from fundamental oil news,” analysts at ODL Securities said in a report.
U.S. crude rose $1.24 to $68.74 a barrel by 1057 GMT, off an earlier high of $70.60. That added to a $4.77, or 7.6 percent, gain on Wednesday. London Brent crude was up 76 cents at $66.23.
Oil has more than halved from its record high of $147.27 struck in July and is down by 30 percent so far this month, putting it on track for its biggest ever monthly fall.
The U.S. Federal Reserve cut interest rates by half a percentage point, taking its target for overnight bank lending to 1 percent, the lowest since 2004, in an attempt to revive the sagging economy.
China also cut its interest rates on Wednesday, kicking off what is likely to be a global round of interest rate cuts, with Norway having already followed suit, and Taiwan and Hong Kong cutting rates too on Thursday.
The Fed cut pushed the dollar lower, making dollar-priced commodities like oil cheaper and more attractive for holders of other currencies.
Also supporting oil were OPEC’s decision last week to cut output by 1.5 million barrels per day, or about 5 percent, to prop up prices and hints that it may reduce supply further.
U.S. weekly inventory data on Wednesday was mixed. Crude oil stocks gained 500,000 barrels, less than the expected 1.4 million rise, but distillate stocks rose 2.3 million, above the 800,000 barrels increase forecast.