Oil is set for its biggest two-day gain in more than a month after the U.S. and China, the world's top two energy users, reduced rates yesterday. Asian stocks and U.S. equity futures rallied after the rate cuts, aimed at boosting bank lending and economic growth.
Crude oil for December delivery climbed as much as $3.10, or 4.6 percent, to $70.60 a barrel on the New York Mercantile Exchange, and was at $70.43 at 2:04 p.m. Singapore time. Yesterday, crude oil jumped $4.77, or 7.6 percent, to settle at $67.50 a barrel. That was the biggest gain since Sept. 22, bringing the two-day increase to 12 percent.
Oil prices, which have tumbled 52 percent since reaching a record $147.27 on July 11, are down 22 percent from a year ago.
Crude prices also climbed as the dollar extended yesterday's decline, falling to a one-week low against the euro. The dollar fell to $1.3183 per euro, the lowest since Oct. 21, and traded at $1.3244 as of 1:51 p.m. in Singapore from $1.2963 late yesterday. The yen weakened to 98.40 per dollar from 97.39.
Investors often purchase crude oil and other dollar-priced commodities when the U.S. currency drops because of their use as an inflation hedge.
Asian stocks, bonds and currencies surged after the interest rate cuts. The MSCI Asia Pacific Index headed for the biggest three-day gain in 16 years.
Futures on the U.S. Standard & Poor's 500 Index rose 1.3 percent today. U.S. stocks declined yesterday, with the benchmark index erasing a 3.1 percent advance in the final 12 minutes, on concern lower interest rates won't stem a recession.
Commodities such as gold and corn were buoyed by a drop in the U.S. dollar and a rebound in equities after borrowing costs were reduced to alleviate a credit freeze and spur growth.
Brent crude oil for December settlement rose as much as $2.88, or 4.4 percent, to $68.35 a barrel on London's ICE Futures Europe exchange, and traded at $68.19 at 2:05 p.m. Singapore time. The contract yesterday gained $5.18, or 8.6 percent, to $65.47 a barrel.