Oil prices rally after German court ruling

Global oil prices rallied sharply on Wednesday, propelled by the weak dollar and soaring equities after Germany's top court approved the eurozone's bailout fund and fiscal pact. Brent North Sea crude for delivery in October jumped to $116.67 per barrel in late morning deals, touching the highest point since May 3, before pulling back slightly. New York's main contract, light sweet crude for delivery in October soared to $98.06, reaching a level last witnessed on August 23. The euro surged as high as $1.2931 -- last seen on May 14 -- after Germany's top court approved a new European firewall for ratification, with some minor conditions, easing fears over the long-running eurozone debt crisis. The weaker greenback makes dollar-priced crude cheaper for buyers using stronger currencies, stimulating demand but also sparking higher prices. The dollar was also hit by speculation that the US Federal Reserve could soon decide to unleash more stimulus cash, or quantitative easing, at its latest monetary policy meeting on Thursday. "Crude prices have ... strengthened after the court ratified the 500-billion-euro fund as expected," said Sucden Financial Research analyst Jack Pollard. "The court limited German liability to 190-billion-euro without Bundestag approval whilst rejecting the complaint concerning the ECB's recently announced bond-purchasing programme." The eurozone cleared a key hurdle towards resolving its debt crisis on Wednesday, after Germany's Constitutional Court overturned a raft of legal challenges aimed at preventing President Joachim Gauck from signing two crucial crisis-fighting tools into law. In a separate development, the International Energy Agency on Wednesday said that oil demand growth was forecast to grow at a steady rate of just 0.8 million barrels per day in 2012 and 2013. However, the IEA added that the strains of weak global economic growth and high prices were fuelling increased energy efficiency and would cap demand growth. "The pace of oil demand growth is expected to remain relatively steady over the next 18 months, with annual gains of just 0.8 million barrels per day in both 2012 and 2013," the agency said in its latest Oil Market Report. "This modest growth rate reflects the combined effects of sluggish global economic activity, historically elevated oil prices and global improvements in energy efficiency," said IEA, an offshoot of the Paris-based Organisation for Economic Cooperation and Development. Later on Wednesday, traders were set to digest the latest monthly snapshot of energy inventories in the United States, which is the world's biggest crude consuming nation.