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Oil prices climb on weak dollar

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(Globalpost/GlobalPost)

Global oil prices advanced on Monday as traders took their cue from a weakening dollar, clawed back some of last week's heavy losses and awaited the result of Italy's general election, analysts said.

Brent North Sea crude for delivery in April jumped $1.05 to $115.15 a barrel in London midday deals.

New York's main contract, light sweet crude for April, gained 73 cents to $93.86 a barrel.

"The rise in oil prices appears to be more as a result of US dollar weakness than anything else," said analyst Michael Hewson at trading group CMC Markets.

In foreign exchange activity, the euro climbed to $1.3272 from $1.3189 late in New York on Friday.

A flagging greenback makes dollar-priced crude oil cheaper for buyers using stronger currencies, stimulating demand.

Traders also kept a close eye on Italy, where polls reopened for a final day of voting in a crucial election in which the centre-left Democratic Party was expected to win but fall short of a majority.

"Equity markets and euro (are) higher probably on the back of a likely Berlusconi defeat," said Hewson, who added that the "bigger risk" was of "political gridlock" in Italy.

Crude futures had fallen in Asian deals on Monday after news of a slowdown in manufacturing activity in China, which is the biggest global energy consumer.

China's manufacturing growth hit a four-month low in February but remained positive, British banking giant HSBC said Monday, but also noted that the world's second-biggest economy was still recovering slowly.

The bank's preliminary purchasing managers' index (PMI) stood at 50.4 for the month, down from a final 52.3 in January, it said in a statement. The figure was seasonally adjusted to take account of the Lunar New Year holiday that fell in the middle of the month.

A reading above 50 indicates expansion and it was the fourth consecutive month of growth, after 12 months of contraction.

The oil market had dived last week on worries of an end to the US stimulus programme amid global economic strains and weak demand for oil in top consumer nation the United States, traders said.

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http://www.globalpost.com/dispatch/news/afp/130225/oil-prices-climb-weak-dollar