Oil prices advanced today after US President Barack Obama agreed to extend the tax breaks introduced by his predecessor George Bush, while the US dollar fell against the euro.
Europe’s single currency strengthened after Ireland’s government unveiled the toughest budget in the country’s history to bring the ballooning sovereign debt under control.
Spending will be slashed by €4.5 billion, while taxes will be hiked by 5%.
A weaker US dollar makes the dollar-denominated crude cheaper for holders of other currencies, lifting demand.
Meanwhile, Barack Obama has given in to the pressure from Republicans, agreeing to extend the tax breaks that mostly affect wealthy Americans.
Goldman Sachs (NYSE:GS) has estimated that the impact from the extension of the tax cuts will equate that of US$185 billion of stimulus.
US light, sweet crude for January delivery rose to US$89.77/barrel, while February crude last traded at US$90.24/barrel on the New York Mercantile Exchange (NYMEX).
On the ICE Exchange, January Brent Crude climbed to US$91.96/barrel. Brent for February delivery reached US$92.10/barrel.
Supermajors BP (LON:BP) and Shell (LON:RDSB) advanced 1.3% and 2% respectively.
BG Group (LON:BG) and Cairn Energy (LON:CNE) climbed 1.35%.
Tullow Oil (LON:TLW) advanced 2.5%.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) added 1% and 2.5% respectively.
Melrose Resources (LON:MRS) led the midcaps, advancing 5.8%.
Heritage Oil (LON:HOIL) and Soco International (LON:SIA) rose 4.5% and 2.5% respectively.
Premier Oil (LON:PMO) tacked on 1.4%.
Salamander Energy (LON:SMDR) rose marginally.
Europe focused oil and gas exploration and production company Ascent Resources (LON:AST) was among the top performing juniors with a 12.5% gain.
US focused Nighthawk Energy (LON:HAWK) and energy sector focused investor Xtract Energy (LON:XTR) advanced 8% and 6% respectively.