LONDON, June 6 – Oil prices advanced on Friday after the European Central Bank (ECB) announced an unprecedented cut in interest rates in a bid to spur economic growth.
US benchmark, West Texas Intermediate for delivery in July, added 22 cents to $102.70 per barrel.
Brent North Sea crude for July advanced 40 cents to stand at $109.19 in London late morning trade.
“Crude prices look solid and likely to stay above their previous close as investors digest the ECB announcement,” Kelly Teoh, managing director at IR Resources in Bangkok told AFP.
“Europe’s better-than-expected economic data and the interest rate cut means Brent will hold up,” Teoh said.
The ECB on Thursday slashed its deposit rate to -0.10 percent. This means banks will be charged for leaving funds at the ECB in the hope they might lend it on to businesses and consumers instead.
It also cut its lending rate to a record low of 0.15 percent from 0.25 percent and said hundreds of billions of euros would be made available in cheap loans to banks as long as they lent more to the private sector.
Gains, however, were capped by a stronger US currency, which makes dollar priced oil more expensive, and hopes that the Russia Ukraine crisis is easing.
Russian President Vladimir Putin returned to the international centre stage on Thursday after being granted his first meetings with Western leaders since the eruption of the Ukraine crisis.
The meeting comes as he says he is ready to meet Ukraine’s newly elected president Petro Poroshenko, raising hopes of an easing in the worst East West standoff since the Cold War.
Investors are concerned that a full blown conflict in the ex Soviet state, a conduit for a quarter of European gas imports from Russia, would disrupt supplies and send energy prices soaring.