Trade Arabia reported that oil prices edged higher pushing towards USD 110 per barrel as hopes that a Greek referendum on a eurozone bailout would be delayed if the government collapsed allowing the eurozone to work its way out of its debt crisis.
Brent crude for December was up 42 cents at USD 109.75 per barrel after slipping as low as USD 107.83 in Asian trading. US crude was up 25 cents to USD 92.76 per barrel.
Oil has been tracking moves in equity markets as the eurozone bail out hangs in the balance following Greece's decision to hold a referendum on the plan in December. But the prospect that the Greek government might collapse, delaying the referendum, raised hopes that the bailout might go ahead after all.
Mr Tony Machcek trader at Jefferies Bache said that "We seem to be tracking the euro/dollar and other markets. There were expectations that stock markets would be hit pretty hard on the back of some strong comments from France and Germany about Greece but stocks have recovered and the euro is up from its earlier weakness."
Mr Simon Wardell an analyst at IHS Global Insight said that "It looks like there is fewer prospects Papandreou gets through the vote of confidence if that happens then the government falls, and it would delay the referendum."
Mr Carsten Fritsch an analyst at Commerzbank in Frankfurt said that the market was in risk off mood whilst waiting for the uncertainty to clear. He also pointed to the bearish outlook from the US Federal Reserve, which on Wednesday slashed its forecast for growth and raised projections for unemployment.
Mr Fritsch said that "It's a second consecutive inventory build, and the disappearance of the overhang is raising questions about the sustainability of the backwardation in the WTI curve. The only bright spot was the strong demand for distillates and the continued draw in those stocks."
