World oil prices climb on faltering dollar

31st May 2011, Comments 0 comments

World oil prices soared Tuesday as the dollar slid against the euro amid mounting speculation over another Greek bailout.

New York's main contract, light sweet crude for delivery in July, rose $1.75 to $102.34 per barrel.

Brent North Sea crude for July added $1.64 to $116.32 a barrel in early afternoon deals.

The European single currency jumped as high as $1.4409 on reports that Greece could receive a new rescue loan.

A weaker dollar makes dollar-priced commodities -- such as oil -- cheaper for investors holding other currencies. That tends to boost demand and prices.

"Prices surged ... as optimistic news about a potential second bailout package for Greece improved market sentiment, supported the euro and raised hopes about the eurozone's economic stability," said Sucden analyst Myrto Sokou.

"After a long holiday weekend in the United States and the UK, the markets are looking for some direction, so the encouraging news about Greece's debt crisis was very welcomed."

European finance officials will meanwhile meet in Vienna on Wednesday to thrash out Greece's debt problems, with a second bailout in exchange for new belt-tightening and sell-offs appearing more likely.

As an EU-IMF mission in Athens nears its conclusion, European diplomatic and governmental sources told AFP the meeting of junior finance ministers and national treasury officials is a regular gathering that prepares finance ministerial talks, the next due on June 20 in Brussels.

However, representatives of the 17 eurozone states will peel off to consider the implications for their finances of a second bailout request from Athens.

"Crude oil is up this morning on dollar weakness," added SEB analyst Filip Petersson on Tuesday.

"In addition, crude oil is supported by bullish equity markets after the Chinese leading index and the Japanese PMI came in above expectations.

"These factors are helping Brent to push through the $115-per-barrel barrier that it has been struggling with for a while now."

Traders are also looking ahead to US markets for leads when they reopen later on Tuesday. Markets in the US, the world's biggest oil consumer, were closed Monday for Memorial Day holiday.

© 2011 AFP

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