Date: Monday 02 Jul 2012
Crude oil futures soared more than 9 per cent on Friday, the biggest one day gains since March 2009, as investors cheered major steps taken by EU leaders to sooth the region's banking crisis.
Crude oil futures settled $7.27 or about 9.36% higher at $84.96 a barrel on the New York Mercantile Exchange. For the week crude oil gained just over 6% and for the month of June crude slipped nearly 2%.
European leaders agreed early Friday on a plan to use the European Stability Mechanism (ESM) funds to help banks in Spain and Italy. Markets had little hope that any major breakthrough would be made at the two day summit so news that the ESM will be used more flexibly to support compliant countries and also used to directly to recapitalise banks sent US equities and crude prices sharply higher.
Crude prices have been under pressure on concern about deteriorating demand as the Eurozone crisis and slowing global growth continues. However investors took heart after Friday's measures to help stabilise the banking systems in Europe.
Investors also monitored US official sanctions on Iran’s oil industry, which came into effect on Thursday. There was a fresh bout of anxiety about tensions between Iran and the West following reports that an Iranian official had made threatening comments about blocking a the key waterway for oil exports the Strait of Hormuz.
Among precious metals gold bounced nearly 4% on Friday as investors breathed a sigh of relief over the EU bank plan.
Gold for August delivery rallied $53.80 to settle at $1,604.20 an ounce on the Comex division of the New York Mercantile Exchange. Bullion rose 2% for the week and just 2.8% for the month of June.
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