Crude oil futures rose in Asian trade Tuesday on positive sentiment after international lenders agreed to cut Greece's debt, while geopolitical hotspots in the Middle East continue to pose a risk to supply, supporting prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $88.12 a barrel at 0737 GMT, up $0.38 in the Globex electronic session. January Brent crude on London's ICE Futures exchange rose $0.33 to $111.25 a barrel.
Euro-zone finance ministers and the International Monetary Fund struck a deal in Brussels to cut Greece's debt to a level below 124% of gross domestic product by 2020, which should allow Greece to receive long-delayed loan payments of about 44 billion euros ($57 billion) that officials said will be paid in three instalments.
The measures, including an extension of loan maturities, a cut to the interest rates Greece is paying on loans from its international partners and a debt buyback, should reduce Greece's debt to "substantially lower" than 110% in 2022, the Eurogroup said in a statement.
But gains from the Greek debt deal are likely to be limited as Europe's economic difficulties remain a concern, analysts say.
However, oil prices will continue being supported by lingering tensions in the Middle East, with the focus shifting to protests in Egypt even as last week's truce between Israel and Palestine holds.
"The Middle East remains a latent trouble spot and therefore a risk factor for oil supply," analysts at Commerzbank said in a note.
Protests had erupted in Egypt after President Mohammed Mursi issued a decree to expand his powers last week. "If there were to be a prolonged phase of instability in Egypt, this could have ramifications for the entire region, which is responsible for producing 25% of the world's crude oil," Commerzbank said.
Separately, the American Petroleum Institute, an industry group, is due to release oil inventory data at 4:30 p.m. ET Tuesday.
U.S. oil-inventory data are expected to show crude-oil inventories rose by 900,000 barrels in the week ended Friday, according to an average of estimates from five analysts. Higher inventory levels are bearish for oil prices.
An increase in refinery runs is expected in the U.S. as East Coast refiners recover after Sandy and some Gulf Coast refiners restart after maintenance, but "this is unlikely to prompt much strength into the crude market given the current exceptionally large surplus," energy consulting firm Ritterbusch and Associates said in a note.
"All in all, we are still viewing the oil complex as a choppy, sideways trading affair," it said.
Nymex reformulated gasoline blendstock for December--the benchmark gasoline contract--rose 41 points to $2.7304 a gallon, while December heating oil traded at $3.0545, 80 points higher.
ICE gasoil for December changed hands at $951.00 a metric ton, up $3.00 from Monday's settlement.
