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Oil price rising on chances for Greek bailout
Source: Agencies |
November 8, 2011, Tuesday
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OIL prices climbed to the highest point since late July yesterday as traders focused on declining US petroleum supplies and also bet that Europe would solve its debt crisis.
Benchmark crude rose US$1.26 to end the day at US$95.52 per barrel in New York. The benchmark price hasn't finished that high since July 29.
Brent crude, which is used to price many foreign oil varieties, increased US$2.59 to finish at US$114.56 in London.
Prices rose early in the day as political rivals in Greece worked out a power-sharing plan that will be crucial for securing a US$179 billion bailout. The partnership between Socialist Prime Minister George Papandreou and conservative leader Antonis Samaras raised hopes that Greece will follow through with spending cuts and other unpopular austerity measures that are needed as part of the international aid package.
A default in Greece could lead to bank failures across the eurozone, further slowing its economy and cutting oil demand.
Still, economists remain wary. Their attention is now focused on the wobbly economy of Italy, which also faces huge debts and slow growth. Yesterday, borrowing rates soared in Italy, intensifying pressure on Premier Silvio Berlusconi to resign. Unlike Greece, Italy is considered too large to rescue.
"This whole eurozone thing is far from resolved," independent analyst Jim Ritterbusch said.
Besides the political developments in Europe, analysts said investors are also paying closer attention to shrinking oil, gasoline and diesel supplies in parts of the US
The US government reported last week that total petroleum stocks are down 62.6 percent from a year ago and they're 5.6 percent lower than the five-year average. Supplies are falling as refineries import less oil while shipping more diesel and gasoline overseas. Airlines and shipping companies also are using more fuel than they did last year, and that's pushing prices even higher.
"Oil demand is at a high point this time of year," independent analyst Andrew Lipow said. "China is importing more diesel, and we're hauling around more stuff."
In other energy trading, heating oil rose 4.91 cents to end at US$3.1198 per gallon and gasoline futures added 6.48 cents to finish at US$2.7282 per gallon. Natural gas lost 8.7 cents to end at US$3.696 per 1,000 cubic feet.
Benchmark crude rose US$1.26 to end the day at US$95.52 per barrel in New York. The benchmark price hasn't finished that high since July 29.
Brent crude, which is used to price many foreign oil varieties, increased US$2.59 to finish at US$114.56 in London.
Prices rose early in the day as political rivals in Greece worked out a power-sharing plan that will be crucial for securing a US$179 billion bailout. The partnership between Socialist Prime Minister George Papandreou and conservative leader Antonis Samaras raised hopes that Greece will follow through with spending cuts and other unpopular austerity measures that are needed as part of the international aid package.
A default in Greece could lead to bank failures across the eurozone, further slowing its economy and cutting oil demand.
Still, economists remain wary. Their attention is now focused on the wobbly economy of Italy, which also faces huge debts and slow growth. Yesterday, borrowing rates soared in Italy, intensifying pressure on Premier Silvio Berlusconi to resign. Unlike Greece, Italy is considered too large to rescue.
"This whole eurozone thing is far from resolved," independent analyst Jim Ritterbusch said.
Besides the political developments in Europe, analysts said investors are also paying closer attention to shrinking oil, gasoline and diesel supplies in parts of the US
The US government reported last week that total petroleum stocks are down 62.6 percent from a year ago and they're 5.6 percent lower than the five-year average. Supplies are falling as refineries import less oil while shipping more diesel and gasoline overseas. Airlines and shipping companies also are using more fuel than they did last year, and that's pushing prices even higher.
"Oil demand is at a high point this time of year," independent analyst Andrew Lipow said. "China is importing more diesel, and we're hauling around more stuff."
In other energy trading, heating oil rose 4.91 cents to end at US$3.1198 per gallon and gasoline futures added 6.48 cents to finish at US$2.7282 per gallon. Natural gas lost 8.7 cents to end at US$3.696 per 1,000 cubic feet.
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