Oil up from 4-month low; Greece, euro in focus
London, June 21, 2011
Oil rose on Tuesday from a dive to a four-month low in the previous session as the euro gained against the dollar ahead of a confidence vote in Greece aimed at avoiding a messy default of its sovereign debt.
US crude for July delivery rose 93 cents to $94.19 a barrel by 1015 GMT. On Monday, it hit $91.14, its lowest level since late February. The contract expires later on Tuesday.
Brent rose 62 cents to $112.31, having fallen in the previous four sessions.
"It is being driven by the euro/dollar. Oil is rising with the euro," said Ken Hasegawa, a commodity derivatives manager at Japan's Newedge brokerage.
Global investors kept a close eye on a parliamentary confidence vote for Greek Prime Minister George Papandreou, a step towards the passage of more spending cuts in exchange for foreign loans.
If the confidence vote is passed, the Greek parliament will vote on the austerity measures by June 28. Euro zone finance ministers gave debt-crippled Greece two weeks from Monday to approve further spending cuts and tax rises in return for another 12 billion euros in emergency loans.
The euro gained against the dollar and European shares also rose ahead of the confidence vote.
Global markets may stay range-bound ahead of a US Federal Open Market Committee meeting, as participants watch for comments by Federal Reserve Chairman Ben Bernanke on the outlook for growth as the second phase of quantitative easing measures in the world's biggest economy is supposed to wind down.
US oil inventories
The next fundamental indicator will come from the US, when industry group the American Petroleum Institute releases its weekly report on stocks later in the day.
US crude oil inventories probably fell in the week to June 17 amid lower imports and a rise in refinery utilization rates, a preliminary Reuters poll ahead of the report showed. Crude stocks were forecast down 500,000 barrels.
The International Energy Agency (IEA) watchdog reiterated high oil prices could derail global economic recovery. "High oil prices are a significant risk to derailing the economic recovery not only in the OECD countries, but also in China and India," IEA's chief economist, Fatih Birol, said on Tuesday.
"China and India are the two most important economies which helped us get out of the economic crisis. If they go for tightening of monetary policies, this may lead to a slowdown in their economies which is bad news for all of us." – Reuters