Oil prices rise; Brent above $112

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World oil futures rose on Tuesday, with the market on edge over the Greek debt crisis, and traders also focused on a warning that high energy prices threaten the global economic recovery.

Brent North Sea crude for delivery in August added 77 cents to $112.46 a barrel in afternoon London deals.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for July, jumped $1.09 to $94.35 a barrel.

Fatih Birol, chief economist at the International Energy Agency, told a conference in Singapore on Tuesday that oil prices remained high, posing a risk to growth.

"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," he said.

"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."

Birol said the average price of oil this year is $110, much higher than the $90 seen in 2008 when crude hit a record above $147 before the onset of the global recession.

David Morrison, an analyst at GFT financial group, said that a weaker dollar was encouraging traders to enter the oil market on Tuesday, pushing up prices.

The European single currency climbed against the dollar on cautious optimism that the Greek government would push through a austerity measures to pave the way for a second bailout loan.

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.

"The endgame to the Greek debt crisis looks like it has been postponed for a few weeks -- today's confidence vote not withstanding -- and gives a temporary lift to risk appetite," Morrison said.

New York crude had on Monday dived to $91.14 a barrel -- the lowest point since February 23 -- as traders eyed a deepening Greek crisis alongside worries about weakness in the Chinese and US economies.

"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.

© 2011 AFP

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