Oil prices rebound but Italy woes linger

27th February 2013, Comments 0 comments

Brent crude prices rebounded slightly on Wednesday ahead of US energy inventory data and a day after they had slid on political deadlock in Italy that triggered fresh worries about the eurozone.

Brent North Sea crude for delivery in April gained 34 cents to $113.05 a barrel in London midday deals.

New York's main contract, light sweet crude for April climbed 21 cents to $92.84 a barrel.

Global crude futures had fallen on Tuesday, with Brent closing down $1.73 a barrel, amid uncertainty stemming from Italy's inconclusive elections and expectations of fresh increases in bulging US crude inventories, dealers said.

Despite Wednesday's gains, "it would appear that financial investors are currently withdrawing from the market amid concerns that reforms could be halted in the wake of the Italian elections and that the euro crisis could flare up again," said Commerzbank analyst Carsten Fritsch.

Investors remained wary on Wednesday after Italy's inconclusive elections gave a key role to an anti-austerity party that has ruled out joining a coalition government, setting the stage for a drawn-out stalemate.

"The outcome of the elections was even more confusing than we had anticipated," the Mediobanca investment bank said as Moody's warned it might downgrade Italy's debt rating, saying the vote result "increases the risk of political paralysis and prolongs political uncertainty."

The rating agency added: "This weeks elections have implications well beyond Italy itself and are, indirectly, credit-negative for other pressured euro area sovereigns."

Traders were meanwhile awaiting publication on Wednesday of the latest weekly snapshot of energy inventories in the United States, the world's biggest consumer of crude oil -- data that tends to have an impact on prices.

© 2013 AFP

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