Economy Jul 27, 2012
Brent remained over $105 per barrel on Friday, buoyed by a European Central Bank pledge to protect the eurozone and hopes for fresh stimulus in the United States, though it stayed on track for its biggest weekly drop in more than a month.
ECB President Mario Draghi said on Thursday the bank would do whatever it took to protect the currency bloc from collapse, with analysts saying this could signal a resumption of the ECB's sovereign bond-buying scheme.
"It was a significant statement that has bought the ECB some time," said Ric Spooner, chief market analyst at CMC Markets.
Brent crude was up 39 cents at $105.65 per barrel, while West Texas Intermediate (WTI) had risen 22 cents to $89.61 per barrel. Both Brent and US crude remained on course for their biggest weekly drop in a month, however.
While the short-term risk surrounding a eurozone break-up has eased, analysts warned that Europe must use the time to work out an effective framework for sharing credit risk within the group.
"If they don't use this time to set up a policy framework that would see the likes of Germany play a bigger role in assuming credit risk, then the risk factor is going to be back on," Spooner said.
"Needless to say the credibility of the ECB will be shredded if there were no serious policy action to follow Draghi's comments yesterday."
While claims for jobless benefits in the United States fell to near a four-year low, analysts said a fresh injection of stimulus would be needed to improve US growth rates, broadly boosting appetite for commodities.
"Today we're likely to see GDP numbers at around 1.5 percent -- not a technical recession, but it's not exactly going to be a boost to confidence," Spooner said.
"You need to see growth over 2.5 percent for us to see those unemployment numbers come down (further)."
More From Firstbiz Staff.