Oil prices surge after Greek vote, US energy report

29th June 2011, Comments 0 comments

Oil prices surged for a second day Wednesday as fears over weak energy demand eased, after Greece backed a stinging austerity plan and as data revealed a plunge in US energy stockpiles, traders said.

New York's main contract, West Texas Intermediate for delivery in August, soared $2.49 to $95.38 a barrel.

Brent North Sea crude for August rallied $2.99 to $111.77 in late London deals.

Greek lawmakers on Wednesday approved an austerity package demanded by international creditors, while the US Department of Energy said that its crude oil stockpiles slumped by 4.4 million barrels last week.

In Athens, lawmakers voted 155 to 138 for the hotly-disputed package to slash 28.4 billion euros ($40 billion) from the balance of government spending by 2015, a plan aimed at unlocking emergency finance from the EU and the IMF.

The plan is a condition for 12 billion euros of emergency loans needed by mid-July from stressed eurozone partners and the International Monetary Fund, that could now be unlocked by eurozone finance ministers as early as Sunday.

Prior to the vote, investors had been on edge about a potential Greek default. Some analysts believe this may still occur, risking shockwaves across global financial markets and potentially slashing demand for energy.

Elsewhere on Wednesday, the United Arab Emirates criticised OPEC's decision to not hike oil production and said it doubted the effectiveness of major consumers drawing down their strategic reserves.

"We very much regret OPEC's decision (earlier this month) to not increase production," UAE Foreign Minister Sheikh Abdullah bin Zayed bin Sultan Al Nahyan told a joint news conference with Swedish Foreign Minister Carl Bildt.

"Prices are far too high and unsustainable. We have to do everything possible to calm the market," Sheikh Abdullah said.

"I think what's more important is the decision which was taken by several countries to increase supplies to the market," he added, apparently referring to Saudi Arabian moves to boost output.

The world's top crude exporter Saudi Arabia on Monday stressed its concern "that the equilibrium and stability of the world market be maintained, as well as the reliability of supplies, in the interests of producers, consumers, and global economic growth".

On June 8, the 12-nation Organization of the Petroleum Exporting Countries (OPEC) -- which pumps 40 percent of global oil supply -- decided at a Vienna meeting to leave its official output target at 24.84 million barrels per day, where it has stood since January 2009.

The decision sent crude prices shooting higher on global markets and exposed deep divisions in the cartel amid calls for a hike in quotas.


© 2011 AFP

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