Crude oil prices up by more than $1/bbl after Greek election

18 June 2012 05:07  [Source: ICIS news]

By Nurluqman Suratman

Crude oil prices up by more than $1/bbl after Greek electionSINGAPORE (ICIS)--Crude oil prices rose by more than $1/bbl in early Asian trade on Monday after a pro-bailout party in Greece won the election over the weekend, easing concerns that the eurozone’s debt crisis will worsen.

At 02:52 GMT, August Brent crude on London’s ICE futures exchange was trading at $98.61/bbl, up by $1.00/bbl from the previous settlement. Earlier, the North Sea benchmark touched a session high of $99.50/bbl, up by $1.89/bbl.

July NYMEX light sweet crude futures (WTI) was trading at $84.83/bbl, up by 80 cents from the previous close. Earlier, the US benchmark reached a session high of $85.60/bbl, up by $1.57/bbl.

Official results of the Greek election released by the Ministry of Interior showed that the conservative New Democracy party swept 29.7% of the votes, with Syriza getting 26.9% and the Pasok Socialists 12.3% in the 17 June election.

The New Democracy party will now seek to form a new pro-austerity coalition government with other parties. The new government will probably embrace the tough financial requirements set by its international lenders, easing worries of a near-term Greek exit from the eurozone.

Global crude prices have been under pressure from concerns that a Greek exit will cause further turmoil in the eurozone and worsen its debt crisis, dampening oil demand growth.

“Overall, the Greek election result, while welcome, does not imply that the Greek people are embracing the tough reforms tied to the bailout package,” said Singapore-based DBS Group Research.

“It merely meant that fear overruled anger. Put simply, the Greek people understood that if they voted to stay out of the euro, it would lead sharply to more pain in the immediate term,” it said.

The general consensus still remains that Greece will eventually exit the 17-nation eurozone, and that the election has “merely bought time for this eventuality”, the research firm added.

“The road ahead is still a difficult one,” said Singapore-based UOB Economic-Treasury Research.

“Problems are certainly not solved and the issues of growth versus austerity; as well as the problems in both Italy and Spain will be closely scrutinized. The immediate focus in the com­ing days will certainly be on the formation of a govern­ment in Greece,” it added.

By: Nurluqman Suratman

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