Oil up in Asian trade

Oil prices rose in Asian trade Friday but the weak US economy weighed on the mood despite a clutch of central banks moving to prevent a further escalation of the eurozone debt crisis.

New York's main contract, light sweet crude for delivery in October, was up seven cents to $89.47 in afternoon trade and Brent North Sea crude for October settlement climbed 52 cents to $112.82.

In a joint action aimed at preventing financial contagion, five of the world's most powerful central banks agreed Thursday to act in concert to lend US dollars to banks facing a shortage of the currency.

The European Central Bank on Thursday announced that it would, in line with the central banks of the United States, Britain, Japan and Switzerland, provide three-month dollar loans to European banks.

The banks have run into serious problems in borrowing dollars recently because the US funds that normally lend to them have become reluctant to do so for fear of contagion from the eurozone debt crisis.

The combination of the debt crisis and liquidity squeeze threaten to turn into a credit crunch, according to some bankers.

"That invested liquidity will likely prevent a recession from hitting the eurozone, and so oil futures are supported," said Victor Shum, an analyst with Purvin and Gertz international energy consultancy in Singapore.

Shum said however that bearish economic figures from United States, the world's largest economy and oil consumer, were limiting price gains in the oil market.

US unemployment claims surged last week to 428,000, underscoring the continued weakness in the jobs market, the US Labor Department said Thursday.

New claims for unemployment insurance rose in the week to September 10 by 11,000 from the previous week's adjusted figure.

In addition, US inflation in August eased slightly from the previous month, but rising gasoline and food prices still hit consumers hard.

"The weak data could add urgency for the Federal Reserve to give the economy a boost," Phillip Futures said in a client note.

"The market expects the Fed to unveil new measures to lift growth when the meeting concludes... next Wednesday."

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Source : AFP