Oil surges after Greek vote, US energy report
2011-06-30 12:53:14
Oil prices surged on Wednesday after a vote in the Greek parliament eased worries about a destabilising default and new data from the United States showed that US crude inventories had fallen.
New York's main contract, West Texas Intermediate for delivery in August, rose $1.88 to close at $94.77 a barrel.
In London, Brent North Sea crude for August rallied $3.62 to close at $112.40 on the IntercontinentalExchange.
Both benchmark crudes have now regained most of the ground they lost after last Thursday's surprise announcement by the International Energy Agency that it was tapping strategic reserves to make up for lost Libyan output.
Wednesday's rally came after Greek lawmakers approved an unpopular austerity plan demanded by international creditors, staving off the threat of a default that could have knock-on effects throughout the eurozone.
The news from Athens cheered investors and caused the euro to rise against the dollar, which in turn buoyed the price of oil, analysts said.
"We saw the euro strengthened and the dollar weakened. That precipitated some buying," said Andy Lipow of Lipow Oil Associates.
A weaker greenback tends to boost dollar-priced commodities, such as oil, which become cheaper for buyers using stronger currencies. In turn, that stimulates demand and prices.
In late London deals, the European single currency rose to $1.4430 from $1.4367 late in New York on Tuesday.
Separately, the US Department of Energy said US crude oil inventories fell by 4.4 million barrels last week, exceeding expectations of analysts polled by Dow Jones Newswires, who forecast a drop of 1.6 million barrels.
"The inventory report was very bullish," said John Kilduff, a partner at Again Capital.
Falling oil inventories in the United States, the world' largest economy, indicate that US demand for energy remains healthy.