Oil prices edge higher, Brent above $112

21st June 2011, Comments 0 comments

World oil prices firmed on Tuesday with the market on edge over the Greek debt crisis, analysts said.

Brent North Sea crude for August added 53 cents to $112.22 a barrel in London morning deals.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for July delivery, gained 89 cents to $94.15 a barrel.

"Financial markets in general and also the oil market are likely to remain nervous today as the showdown in the Greek parliament approaches," said SEB oil analyst Filip Petersson.

Europe gave Greece a two-week deadline on Monday to drive through painful new austerity measures in order to gain access to emergency funds needed to avert a default.

They did so to allow Prime Minister George Papandreou's government time to win a confidence vote called for Tuesday, and again mobilise a wafer-thin majority on June 28 to steer the austerity cuts into legislation.

Oil prices had diverged on Monday, with New York crude boosted by hopes of falling US energy stockpiles in the US government's weekly report that is due on Wednesday.

However, Brent oil fell on fears that the Greek crisis would translate into weaker European energy demand, according to Westhouse Securities analyst Peter Bassett.

"WTI rose on investor expectations of lower US stockpiles when the (US) inventory figures this week; while Brent fell on fears that the Greek crisis would curtail oil demand in Europe," Bassett said.

The International Monetary Fund has warned that decisive action is needed to prevent the Greek crisis from spreading throughout the 17-nation eurozone and beyond.

On Tuesday, chief economist of International Energy Agency, Fatih Birol, said crude prices remained high and threatened to hold back the global economic recovery.

"My worry is that the current prices (are) a major risk for the global economic recovery and I'm very worried to see the same movie that we saw in the year 2008," Birol said at a conference in Singapore.

"I think if they stay so, there is a strong potential we see a risk that the high prices, the high oil prices can derail the economic recovery," he said.

© 2011 AFP

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