FX:Crude oil rebounds as focus remains on Greece, supply fears
Forexpros - Crude oil futures regained strength on Tuesday, bouncing off the lowest level in nearly a week as appetite for riskier assets was boosted amid signs of progress in talks between Greece and its bondholders, while concerns over a disruption to supplies from Iran and South Sudan lent further support.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at USD99.90 a barrel during European morning trade, jumping 1.13%.
It earlier rose by as much 1.18% to trade at a session high USD99.93 a barrel. Prices fell to a four-day low of USD98.43 a barrel on Monday.
Speaking at a European Union summit in Brussels, Greek Prime Minister Lucas Papademos said "significant progress” was made in talks aimed at restructuring the country’s debt, boosting hopes that a deal can be finalized before the end of the week.
An agreement is necessary for Greece to secure the next tranche of bailout funds in order to prevent a sovereign debt default.
Meanwhile, EU leaders agreed on its fiscal union pact and signed off on the details of a EUR500 billion permanent bailout fund for the euro zone.
The U.S. dollar weakened against most of its major counterparts, boosting the appeal of dollar-denominated oil futures contracts. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.34% to trade at 78.96.
Meanwhile, oil traders continued to eye tensions between Iran and the West. Lawmakers on the U.S. Senate Banking Committee plan to vote on a new round of sanctions targeting Iran's energy sector.
Last week, the European Union agreed to ban oil imports from Iran starting July 1 to pressure the Persian Gulf nation over its nuclear program.
Iran is the world's fourth largest oil producer, pumping nearly 5% of the world's oil in 2010. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for March delivery rose 0.9% to trade at USD111.75 a barrel, with the spread between the Brent and crude contracts standing at USD11.85 a barrel.
Brent prices were boosted after South Sudan’s oil minister said Monday that the country has totally shut down oil output in response to a conflict with Sudan over export transit fees. The country produces approximately 350,000 barrels of oil per day.
South Sudan seceded from Sudan in July under a 2005 peace deal that ended decades of civil war, but the two countries have remained at odds over issues including oil, debt and fighting along the poorly drawn border.
