RTRS:RPT-UPDATE 2-Oil gains ground on hopes for Greece resolution
(Repeats to more subscribers)
* French plan to roll over Greek debt boosts risk appetite
* Dollar weakness helps lift crude prices
* Eyes on impact of IEA stock release, OPEC reaction
By Simon Falush
LONDON, June 28 - Oil rose on Tuesday as an agreement by
France to roll over holdings of mature Greek debt boosted
appetite for riskier assets like commodities and helped lift the
euro against the dollar.
President Nicolas Sarkozy said French banks had reached a
draft agreement with the authorities on a voluntary rollover of
maturing bonds.
This settled investor nerves as markets anxiously awaited
the outcome of a vote in Greece to approve unpopular fiscal
austerity measures.
ICE Brent crude for August LCOc1 was up 68 cents to $106.67
a barrel by 0942 GMT after hitting an intraday high of $107.50.
U.S. crude CLc1 added 35 cents to trader at $90.96.
Oil was also supported as the euro gained and the
dollar index fell as a weaker U.S. currency makes it more
attractive to holders of other currencies.
"If there's a resolution to the situation in Greece, it will
boost the euro and that will support oil as there's such a
strong FX component," Harry Tchilingurian, oil analyst at BNP
Paribas said.
Investors were still watching to see if Greece's parliament
will approve austerity steps that are a precondition for
international aid that the country needs to avoid a default.
Prices were expected to remain volatile as some investors
were still worried about the result of the Greek vote, said Ken
Hasegawa, a commodity sales manager at Newedge Japan.
"WTI (West Texas Intermediate, or U.S. crude futures) may be
supported around $90, but any upside will be limited because of
concerns about the economy in the euro zone," he said.
DEFAULT FEARED
Without approval, the European Union and the International
Monetary Fund say they will not disburse the fifth trance of
Greece's 110 billion-euro bailout programme. Athens needs the
aid to pay its bills next month and avert the euro zone's first
sovereign default.
Investors are closely watching the impact of the release of
60 million barrels of oil from International Energy Agency
reserves.
South Korea will start to release 3.46 million barrels of
oil, including 2 million barrels of crude and 1.46 million
barrels of products by "today at the earliest," a source at the
economy ministry said.
Reactions from members of the Organization of the Petroleum
Exporting Countries, many of whom oppose the release, are also
under scrutiny, analysts said.
BP's chief economist told Reuters Insider TV on Monday oil
consuming nations risk a long conflict with a trenchant OPEC by
challenging the producers' club on its own turf with a supply
response to high prices, and the strategy could backfire.
Iran said on Tuesday there was no need for an OPEC emergency
meeting as the oil market is balanced, the Oil Ministry website
quoted Iran's OPEC governor Mohammad Ali Khatibi as saying.
The market is also gearing up for crude inventories data in
the United States in industry data due late Tuesday. Analysts
are expecting stocks to shrink for the fourth week in a row.
Investors were also watching events in Libya, after the
International Criminal Court issued an arrest warrant on Monday
for leader Muammar Gaddafi, and rebels trying to oust him said
their forces had advanced to within 80 km (50 miles) of the
capital.
