Oil Prices Rise on Europe Hopes, Weaker Dollar
Oil prices closed higher Friday as investors grew more optimistic about an improvement in Europe's economic situation and took advantage of a weaker dollar.
New York's main contract, West Texas Intermediate (WTI) for January delivery, added 90 cents from Wednesday to close at $88.28 a barrel.
In London trade, Brent North Sea crude for delivery in January firmed 83 cents, settling at $111.38 a barrel.
Volumes remained thin in the New York market, which was closed Thursday in observance of the Thanksgiving Day holiday and had a one-hour shorter session Friday.
The dollar's fall against the euro was helping to support all dollar-priced commodities, including crude oil, said Bart Melek at TD Securities.
A weaker dollar makes crude oil more attractive to buyers using other currencies, lifting demand.
Traders in New York also reacted to "a positive German surprise," with the IFO business confidence unexpectedly halting a six-month slide and rising in November in Europe's biggest economy, he said.
"For a while a lot of people were expecting that the European economy was shifting towards a deeper slowdown and, as it looks, it may be doing a little bit better," Melek said.
In addition, the analyst said, there were encouraging developments on Greece's sovereign debt crisis and investors were hoping that a eurozone agreement on releasing critical aid to Athens "may be coming in the not too distant future."
European officials have voiced confidence that a deal will be reached Monday, at the next emergency meeting of the Eurogroup of finance ministers from the 17 states that use the single currency.
In the oil-rich Middle East, a cease-fire between Israel and Hamas in the Gaza Strip that started late Wednesday after eight days of deadly conflict was still in effect.
"The ceasefire in the Gaza Strip has eased major oil supply concerns," said Sucden Financial analyst Myrto Sokou.
"However, the political and economic conditions across Middle East remain very tentative, offering mixed signals in the oil market."