NEW YORK ( TheStreet) -- After some hesitation, oil prices resumed their rally on comments made by European Central Bank President Jean Claude Trichet at his final press conference.
Earlier today, West Texas Intermediate light sweet crude oil for November delivery and Brent crude oil for December delivery took a dip, as the markets shed long positions on warnings of "intensified downside risks" in the eurozone and the ECB's resumption of its bank-bond buying program.
Trichet said the central bank will extend loans to banks to ensure that they don't run into liquidity problems. He said it will spend €40 billion ($53 billion) on covered bonds starting in November and offer unlimited loans of 12 to 13 months. The ECB left interest rates unchanged at 1.5% today. After digesting the rest of Trichet's announcement, oil prices bounced back, with WTI rising 75 cents to $80.43 a barrel and Brent rising 71 cents to $101.83. "The first reaction in the marketplace was that the ECB was doing quantitative easing -- that's usually weak for the euro. If the euro gets weaker, the dollar gets stronger," leading to weaker oil, said PFGBest senior energy analyst Phil Flynn. But then, after the markets thought about it some more, they realized, says Flynn, that quantitative easing is actually beneficial for the oil markets, whether it takes place in the U.S. or Europe. "They feed more money to banks ... if Europe's banks don't collapse and there's more liquidity ..." that's bullish for oil, Flynn pointed out. The PFG Best analyst says following WTI's bounce off of the first intraday support level of $79.40, he's expecting it to hit some resistance at $81.80 today. For Brent, it has bounced off the first level of support at $100 and could meet resistance at $102.90. A lower-than-expected increase in jobless claims and news that the Bank of England will expand its bond-buying program by 75 billion pounds ($114.75 billion), to 275 billion pounds also helped oil prices resume the previous day's modest rally. Apache ( APA) was rising 1.6% to $84.22; Anadarko ( APC) was falling 0.2% to $65.38; Chesapeake Energy ( CHK) was gaining 2.2% to $25.96; EOG Resources ( EOG) was adding 0.7% to $77.36; Baker Hughes ( BHI) was spiking 2% to $49.80; Schlumberger ( SLB) was advancing 2.2% to $62.92; and Ensco ( ESV) was adding 1.6% to $41.46. -- Written by Andrea Tse in New York. >To contact the writer of this article, click here: Andrea Tse.