CT: OIL FUTURES Nymex Crude Edges Higher On Greece Aid Plan
NEW YORK (Dow Jones)--Crude futures rose Friday as an aid plan for Greece formed, but concerns about the health of the U.S. economy - and gasoline demand - limited gains.
Light, sweet crude for May delivery recently traded 51 cents, or 0.6%, higher at $81.04 a barrel on the New York Mercantile. Brent crude on the ICE futures exchange traded 66 cents, or 0.8%, higher at $80.27 a barrel.
The agreement between the European Union and the International Monetary Fund to assist Greece if the country requests help with its massive debt has begun to lift one of the heaviest weights on oil prices this year. The delay in tackling Greece's slide into a fiscal crisis has steadily weakened the euro against the dollar, raising the cost to buy dollar-denominated oil using the European currency.
The bailout caused the dollar to weaken to $1.3375 against the euro recently, from a 10-month high of $1.3267 earlier.
"It certainly takes some of the worries out of the market, so you would think we'd be a little stronger," said Tom Bentz, an analyst and broker with BNP Paribas Commodity Futures Inc.
Oil market participants could cite plenty of other reasons for crude futures not to move higher, however. The Commerce Department revised fourth-quarter U.S. gross domestic product down to 5.6%, from an earlier estimate of 5.9%. The slightly downgraded pace of the economic recovery is expected to reduce investors' willingness to buy into markets most closely tied to growth, including oil and equities.
Gasoline futures, the strongest segment of the oil market for weeks, are also looking increasingly shaky. The reformulated gasoline blendstock, or RBOB, contract had risen sharply earlier this month as traders prepared for the usual increase in U.S. demand heading into summer. But the gains may have overshot reality - stockpiles of the fuel are closing in on a 17-year high for this time of year, and demand is only slightly above last year's depressed levels. Only a steep cut in gasoline production can prevent gasoline prices from crashing back to earth, analysts said.
"Short of a significant downswing in Gulf Coast refinery activity, the RBOB futures appear to have made their seasonal run," wrote Jim Ritterbusch, president of the trading advisory firm Ritterbusch and Assoc. in Galena, Ill.
Front-month April reformulated gasoline blendstock, or RBOB, recently traded 0.85 cent, or 0.4%, higher at $2.2262 a gallon. April heating oil traded 1.65 cents, or 0.8%, higher at $2.0858 a gallon.
