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Oil rallies after US GDP data tops forecasts

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Oil prices rallied today with Brent crude tacking on nearly US$1 per barrel in London amid signs that the economic recovery in the world’s largest energy consumer is picking up speed.

The Commerce Department has revised its US GDP growth estimate for the final quarter of 2011 to three percent from a previous reading of 2.8 percent, which expectations were for no change or a reduction to 2.7 percent.

The Chicago purchasing managers index (PMI) also surprised on the upside, showing that manufacturing activity in one of America’s key industrial regions has been on the rise.

The Institute for Supply Management said its gauge for February came in at 64, up from 62.2 in the previous month.

Earlier in the day, the European Central Bank (ECB) injected €530 billion into the European banking system through the second longer term refinancing operation (LTRO). The funds were provided in cheap three year loans.

In the meantime, it was reported today that Japan is close to an agreement with the US to reduce dependence on Iranian oil. Japan is currently importing 313,000 barrels of crude from the Middle Eastern country which is accused of developing a nuclear weapon.

Earlier this month, Iran stopped exporting oil to Britain and France in response to an embargo imposed by the EU in January, while the International Atomic Energy Agency (IAEA) said the country had stepped up its uranium enrichment activites.

US light, sweet crude for April delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rose 13 cents to US$106.68/barrel in morning trade in New York.

April Brent crude rallied 98 cents to US$122.76/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Kea Petroleum (LON:KEA), up 14 percent at 8.7 pence at midday

Falkland Oil & Gas (LON:FOGL), up nine percent at 68 pence

Bahamas Petroleum (LON:BPC)
, up eight percent at 14.3 pence

Amerisur Resources (LON:AMER), up six percent at 27 pence

3Legs Resources (LON:3LEG)
, up 5.5 percent at 71.25 pence

The top fallers were:

Matra Petroleum (LON:MTA), down 7.5 percent at 0.883 pence at midday

Pantheon Resources (LON:PANR), down 5.5 percent at 7.66 pence

BowLeven (LON:BLVN), down 5.5 percent at 96.5 pence

Providence Resources (LON:PVR), down 5 percent at 373.03 pence

Tower Resources (LON:TRP), down 5 percent at 2.85 pence

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