Oil climbs as European markets rise, Dow Jones futures point to higher open

Amid lack of other cues, crude moved along with equity and currency markets today. Trends in both were favourable to oil prices. European stocks were on the rise today with the UK’s FTSE 100 climbing 0.7% despite today’s decision by the Office for Budget Responsibility (OBR) to cut the growth forecast for the UK to 2.6% from the 3.25% projection featured in the budget.
On a positive note, OBR said that borrowing would be £23 billion lower than projected in March’s budget.
The news boosted the sterling, while the euro advanced after it was reported that industrial production in the euro zone improved 0.8% month on month for a year on year increase of 9.5% in April. The US dollar declined against a basket of six other major currencies, making dollar-denominated assets including crude cheaper for holders of other currencies to boost demand.
The news also added recovery optimism to the markets, sending shares in Asia, Europe and the US up. Movements in equity markets usually serve as an indicator of the outlook for oil demand, impacting the prices.
US markets surged late on Friday and are currently projected to open higher today after the University of Michigan consumer sentiment index surged to 75.5, the highest level since December 2007.
July Brent Crude rose to US$75.69/barrel, while US light, sweet crude for July delivery advanced to US$75.10/barrel.

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