LONDON: World oil prices perked up on Monday as investor worries over Dubai s debt crisis receded, analysts said.
New York s main contract, light sweet crude for January delivery, added 11 cents to $76.16 a barrel.
Brent North Sea crude for January delivery gained ten cents to $77.28 a barrel in early London trading.
News that the debt crisis in Dubai might be controlled boosted investors’ sentiment and pushed commodity markets higher, said analysts at the Sucden Financial Research brokerage in London.
Crude oil markets recovered from earlier losses last week and rose towards $77 per barrel, supported by a weaker dollar and gains in Asian equity markets.
The United Arab Emirates central bank had announced on Sunday that it was providing additional liquidity to banks, amid worries about the global banking sector s exposure to Dubai.
It seems that investors have already digested Dubai news, but we might expect another correction lower in equity and commodity markets if Dubai failed to solve its debt problems soon, Sucden analysts added.
Market participants could remain cautious ahead of any additional news from Middle East.
However, (the) IMF said that it welcomed the move by UAE s central bank to provide emergency support to banks, giving an additional liquidity feature.
The Dubai government had rocked global financial markets last Wednesday when it announced that it wanted to freeze debt repayments by its mighty Dubai World conglomerate until at least May next year.
The announcement had sparked steep losses on equity and oil markets around the world.
It seems to have calmed down, said Victor Shum, a Singapore-based analyst with the Purvin and Gertz energy consultancy.
Reassurances from various governments have returned a bit of calm to the financial markets and oil markets, so oil pricing has gone up from the settlement price on Friday, he said.
Shum added: The fear was that it would trigger the same crisis that started with the fall of Lehman (Brothers) last year.
Dubai s debt crisis could provide China an opportunity to snap up oil and gold assets to diversify its foreign exchange investments, state-run press quoted a senior official as saying in Shanghai on Monday.
This may give China an investment opportunity to use part of its foreign reserves to buy gold and oil reserves, said Ji Xiaonan, head of the supervisory board of the State-Owned Assets Supervision and Administration Commission. Ji s comments appeared in the Economic Information Daily. – AFP
