Oil rises as volcanic ash threat recedes

20 April 2010

Written by John King

Crude oil prices were rising on the New York Mercantile Exchange this morning (April 20th) as the resumption of flights across many parts of Europe led to increased demand for jet fuel.

Flights have been grounded in the UK, Ireland, France, Germany and many other countries since the eruption of an Icelandic volcano last week which created an ash cloud over much of northern Europe.

"The market reacted to the disruptions to air traffic in a knee-jerk fashion, but now flights are increasing especially from southern Europe and there is a big push to try to allow more," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp, speaking to Reuters.

As European markets opened, crude was trading up 61 cents at $82.18 (£53.50) a barrel, while heating oil futures also moved higher.

Mr Nunan added that the Goldman Sachs fraud case also weighed on trading in recent sessions, although its effect on oil fundamentals is limited.

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