Crude Gains as Greek Outlook Brightens
Source: Wall Street Journal, Dan Strumpf (7/19/11)
"A weaker dollar helped oil prices advance, as the outlook for another bailout for Greece brightened."
A weaker dollar helped oil prices advance, as the outlook for another bailout for Greece brightened.
The rally erased much of Monday's losses, as prices remain stuck in a narrow range without a clear resolution to debt concerns in Europe and the U.S.
Light, sweet crude for August delivery traded up $1.83, or 1.9%, to $97.76 a barrel in midday trade on the New York Mercantile Exchange. September Brent crude on ICE Futures Europe rose 97 cents, or 0.8%, to $117.02 a barrel.
Oil futures took cues from currency markets ahead of Thursday's summit of European leaders, who will meet to discuss a new round of aid for debt-laden Greece. The euro advanced against the dollar Tuesday, retracing some of Monday's losses, after a European Central Bank official indicated that the bank is softening its stance on the conditions for another Greek bailout.
The euro was recently 0.2% higher against the dollar, trading at $1.41551. A weaker greenback tends to boost crude prices by making the commodity cheaper for holders of other currencies.
Nymex crude has settled in a range between $92 and $100 a barrel over the last three weeks. Traders remain wary of laying big trades in either direction, with uncertainty over Europe's debt crisis capping crude at $100 a barrel, while the removal of Libya's exports and brisk economic growth in emerging markets have kept a floor under prices.
Market participants are also concerned about whether U.S. lawmakers will find a solution to an impasse over the nation's debt ceiling ahead of an Aug. 2 deadline. Analysts say a U.S. default would lead to higher borrowing costs, trigger a flight from risky assets like stocks and commodities, and hobble the economic recovery in the world's largest crude consumer.