LP:Brent oil futures end week little changed at $118 a barrel
Brent oil futures end the week’s trading session little change at $118 a barrel as markets continued to react positively to the agreement by European leaders to support Greece and contain the EU debt crisis.
Brent Oil Futures – Closing Price
Brent crude oil futures for September 2011 delivery ended the week’s trading session at $118.55 a barrel on the ICE Futures Exchange yesterday evening, $0.89 higher than last week’s closing price of $117.66 a barrel.
Euro Debt Crisis and Oil Prices
On Thursday, Europe’s leaders announced 159 billion euros of new aid for Greece, including a pledge by banks to exchange and buy back the nation’s debt which may result in a short term default.
Brent crude oil prices oil jumped 1 percent to top $118 in a lighter holiday trading session yesterday, buoyed the agreement to bailout Greece once again.
“A lot of what we are seeing today is spread related. From the WTI perspective you will see that Brent and US products are strong and that is pulling oil prices higher.” said Tim Evans at Citi Futures Perspective, New York.
However oil trading volumes remain thin with Brent oil futures volume down 57 percent from the 30 day average.
Analysts and traders said the short term solution to Europe’s debt crisis presented in Brussels on Thursday was still providing some support for Brent oil prices.
But some analysts warned that the positive impact of European deal could be short lived.
“The surge in commodity prices that has taken place over the last few weeks will almost certainly kick start inflation readings again, and prompt more central banks to raise interest rates.” according to Edward Meir at brokerage MF Global in New York.
IEA Oil Release Cancelled
Meanwhile, the IEA in an update on market conditions following the June action said tightness in the oil market has diminished.
The IEA said it was closely monitoring the market and was ready to act if necessary. Oil stocks are still entering the market, the agency said, adding, “We are not now seeking the release of additional stocks.”
“The IEA’s intervention has not been a game changer for oil prices and the big picture will still be determined by more fundamental forces.” said Julian Jessop, Chief International Economist at Capital Economics who expects Brent oil prices to fall back to $85 by the end of the year.
