• Crude Futures Up 1.1 Percent
• Dollar Dives
• Analysts Question Long-Term Implications

Crude oil futures leaped up commodities charts Thursday following upbeat comments from European Central Bank President Mario Draghi and a round of positive jobless claims data in the U.S.

Light sweet crude futures for September delivery saw an advance of over 1.1 percent, to USD89.96 a barrel in early U.S. trading Thursday.

“Whatever It Takes”

Speaking at a British Business Embassy event also attended by Prime Minister David Cameron, Draghi reiterated comments made to a French newspaper that the bank will "do whatever it takes to preserve the euro".

“Within our mandate the ECB is ready is ready to do whatever it takes to preserve the euro, and believe me, it will be enough”, he added, boosting sentiment surrounding the single currency and sending it up more than 1 percent against the USD.

EUR/USD has now gained over 160 pips since Draghi’s comments, having hit a one-week high of 1.2286 and is currently trading at around 1.2260 on currency charts. The single currency also found itself making significant gains against the yen following the positive speech by Draghi, which appeared to guarantee intervention by the central bank; EUR/JPY rose almost 1 percent to 96.00.

Oil Gains On Dollar Drop

With the dollar moving to the downside, the New York Mercantile Exchange, light sweet crude futures for September delivery saw an advance of over 1.1 percent, to USD89.96 a barrel. Dollar-priced commodities tend to rise when the dollar falls, as it makes the asset cheaper to purchase for buyers in other currencies.

Growing speculation over the prospect of further stimulus measures from the Fed. also took a toll on the greenback Thursday afternoon.

Draghi’s reassuring remarks also helped to lower yields on Spanish and Italian10-year bonds. After soaring to new highs in recent days – with Spain’s yields way above the 7 percent danger level – yields fell back down to 6.99 percent in Spain and 6.06 percent in Italy. The ECB President appeared to guarantee that intervention of some kind would be forthcoming if they began to interfere with the ‘transmission’ of monetary policy.

Hot Air?

But many analysts are now warning that Draghi’s reassurances may be little more than hot air and unlikely to sustain any long-term rally. “Firstly, we have been here before”, argues Nicholas Spiro of Spiro Sovereign Strategy. “The ECB has already used this argument to justify its previous interventions in peripheral euro zone bond markets.

“Secondly, German resistance to direct and indirect policy measures on the part of the ECB to lower Spanish and Italian bond yields has risen over the past several months. It remains to be seen whether Berlin is willing to turn a blind eye to more forceful policy measures to lower Spanish and Italian yields should market conditions deteriorate further.

“Having said this, verbal intervention clearly helps: Spanish and Italian benchmark bond yields have already fallen by some 35 basis points since Mr Draghi made his comments.” Stock markets appear to have been similarly beguiled by Draghi, with Italy's FTSE Mib Index up 4 percent to 13,033.56 and the IBEX 35 in Madrid up 3.5 percent to 6,210.80.

Sarah Cox, Markets Writer. ForexSpace.com