Oil rallies as greenback weakens

World oil prices rallied yesterday on the back of a weakening dollar, as traders shrugged off news of demand forecast downgrades from both the International Energy Agency and the Opec oil cartel. In London trade at noon, Brent North Sea crude for delivery in November leapt $1.12 to $111.85 (Dh410.83) a barrel. New York's main contract, light sweet crude for November, gained 59 cents to $86.40 a barrel. "Crude oil prices extended gains and climbed higher, as the weaker US dollar provided strong support to the oil market," said Sucden brokers analyst Myrto Sokou. Article continues below The European single currency soared to a three-week dollar high yesterday as markets expected Slovakia to eventually back expansion of a Eurozone bailout fund despite lawmakers voting against it. The euro surged to $1.3816, the highest level since mid-September and compared with $1.3660 in New York on Tuesday. Stimulating demand A weaker greenback makes dollar-priced crude cheaper for buyers using stronger currencies. This tends to stimulate demand and support higher prices. Slovakia's parliament on Tuesday blocked a plan to expand the European Financial Stability Facility (EFSF), dealing another blow to the Eurozone's leaders as they look for a solution to the bloc's debt and banking crisis. "Slovakia's parliament voted no for the expansion of the EFSF, effectively vetoing the motion in the Eurozone for the time being," Sokou said.