Oil prices firm before Greek vote, US energy report

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Oil prices firmed on Wednesday, ahead of the weekly snapshot of US energy inventories and amid hopes that Greek lawmakers will vote to approve austerity measures that are needed to avert default.

New York's main contract, West Texas Intermediate for delivery in August, gained 59 cents to $93.48 a barrel, after soaring $2.28 on Tuesday.

Brent North Sea crude for August climbed 55 cents to $109.33 in early London trade after leaping $2.79 the day before.

Lawmakers in Athens are expected to vote later Wednesday on austerity measures demanded by international creditors in exchange for the money that Greece urgently needs to avoid default.

The oil market had rallied on Tuesday as traders took their cue from buoyant stock markets and signs that Europe would hash out a deal to defuse the Greek debt crisis.

Investors are on edge about a potential Greek default that could shatter confidence, send shockwaves across global financial markets and slash demand for energy.

The market also eyed stormy weather in the Gulf of Mexico, where many energy installations are based, and reports of falling crude stockpiles in the United States.

"Oil prices were higher yesterday, as investors awaited the outcome of voting on a package of measures in Greece, which would enable the country to avoid default," said Westhouse Securities analyst Andrew Matharu.

"In addition, the Gulf of Mexico has seen its first tropical storm of this year's hurricane season and, after hours, the API reported a 2.7-million-barrel drop in crude supplies, ahead of expectations."

Tropical Storm Arlene formed in the southwestern Gulf of Mexico on Tuesday, US forecasters said, becoming the first named storm of the hurricane season in the Atlantic.

Meanwhile, industry body the American Petroleum Institute (API) said that oil stocks fell 2.7 million barrels in the week to June 24. That was far more than analysts' forecast for a drawdown of 1.4 million barrels.

The market will get another reading later Wednesday when the US government's Department of Energy will publish its weekly snapshot of inventories.

Falling reserves indicate strengthening demand in the United States, which is the world's biggest economy and largest oil-consuming nation.

Across in Greece, despite a general strike and street protests, traders were hopeful that the Greek parliament would on Wednesday pass the tough measures required under an International Monetary Fund-European Union bailout.

© 2011 AFP

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