Crude oil futures rise in U.S. afternoon trade

Forexpros – Crude oil futures extended gains in U.S. trade Friday, boosted by a weakening dollar against the euro, as the European Central Bank appeared prepared to buy Italian bonds in return for economic reforms.

On the New York Mercantile Exchange light, sweet crude futures for September delivery traded at USD86.75, gaining 0.33%, after hitting a daily low of USD83.03.

The European Central Bank was reportedly prepared to purchase Italian bonds in return for promises of further financial reforms from Italy, sending the U.S. dollar lower against the euro..

The ECB on Thursday, after a four-month lapse, began buying government bonds from Ireland and Portugal but stopped short of purchases from key debt-threatened members Italy and Span.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as oil becomes less expensive for purchasers in other currencies.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies fell 1.13% to 74.68.

U.S. firm Valero Energy Corp. announced it had shut down a unit at its Tennessee refinery following a fire at the facility. Valero said it couldn’t predict how long production would be affected.

Meanwhile, Iran attempted to ease fears of a drop in production after a pipeline explosion and fire near the country’s Iraqi border, saying production had not been disrupted.

Earlier Friday, Iranian representative to the Organization of Petroleum Exporting Countries, Alli Khatibiti, suggested that OPEC will need to meet if crude prices were to suffer additional slumps, although he added it was too early to make a call on price direction.

On the ICE Futures Exchange Brent oil futures for September delivery added 1.4% to trade at USD109.19.

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