Oil prices jumped by the most in weeks yesterday, with US crude
reaching its highest in more than two months as technical buying and signs of
speedier efforts to avert a US fiscal crisis fueled an abrupt year-end rally.
After trading about $ 1 a barrel higher earlier in the day, oil prices jumped by another $ 1 in the early US hours.
Brent crude held most of those gains by mid-morning, up $ 1.76 or 1.6 percent at $ 110.56 a barrel by 1530 GMT, on track for its biggest one-day rise since mid-November. Volume was about one-sixth the average.
US crude led yesterday's gains, up $ 2.17 from Monday's close to $ 90.77 a barrel, but trading activity remained subdued.
About 150,000 lots had changed hands, roughly a third of the daily norm.
Oil prices dropped more than 1 percent on Friday after US fiscal talks dissolved when Republican lawmakers withheld support for a proposal to avert a raft of tax hikes and spending cuts, but many investors doubt that lawmakers would risk tipping the fragile US economy into recession again.
Friday's intraday low for WTI crude was a major 50 percent retracement mark, and $ 88 a barrel was a "big level that a lot of people were watching", Bill Baruch, senior market strategist at iitrader.com LLC in Chicago, told Reuters.
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