February 9, 2012 / 7:31 AM / 7 years ago

Brent rises for 8th day after Greek bailout deal

NEW YORK (Reuters) - Brent crude oil rose on Thursday for the eighth straight day, ending at a six-month high, after Greek leaders agreed to austerity measures to secure a second bailout and avoid an unruly default.

A driver refuels his car at a gas station in Milan November 8, 2011. REUTERS/Alessandro Garofalo

U.S. crude rose for a third consecutive session, boosted by the news from Greece and an encouraging dip in the number of Americans filing for unemployment benefits.

Freezing weather in Europe, Middle East tensions spawned by Iran’s nuclear program and rising violence in Syria provided further support to oil futures.

Investors shrugged off a monthly forecast from the Organization of the Petroleum Exporting Countries, which reduced its global oil demand growth this year by 120,000 barrels per day to 940,000 bpd, citing the euro zone’s debt troubles and higher retail prices.

“Keeping oil prices higher are the evolving geopolitical situation in and around the Middle East ... in particular Iran, the bitter cold winter weather that has hit major portions of Europe driving up demand for heating fuels, as well as more signs that a Greek deal may be close to finally getting done,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Greek political leaders came to terms on a long-stalled deal on reforms needed to gain a second international bailout from the European Union and the International Monetary Fund.

The agreement came hours before the country’s financial backers began meeting in Brussels. It lifted the euro to a two-month high against the dollar, bolstering riskier assets such as oil and commodities.

Following news of the Greek action, European Central Bank President Mario Draghi signaled opening the doors for an indirect aid to Greece.

The IMF and Greek authorities continued talks past midday to finalize details of the new rescue package.

In London, ICE March Brent crude settled at $118.59 a barrel, rising $1.39, or 1.2 percent, the highest close for front-month Brent since July 22, when prices ended at $118.67.

Brent crude has jumped more than 7 percent since January 31, the biggest eight-day percentage gain since a surge of nearly 15 percent in October.

Brent front-month’s Relative Strength Index (RSI) has reached 73.9, crossing the 70 level, Reuters data showed, which denotes an overbought condition.

U.S. March crude closed at $99.84, gaining $1.13, or 1.14 percent, the highest for front-month NYMEX crude since January 19’s settlement at $100.39.

Refined product futures lent some support to U.S. crude, with the March RBOB contract closing above $3 a gallon for the first time since August 31 and March heating oil ending above $3.20, the highest since May 2011.

News of a brief fire on Wednesday at Korea National Oil Corp’s 115,000 barrels per day refinery in Come by Chance, Newfoundland, was supportive for U.S. gasoline futures, traders said.

The Brent-WTI spread widened to $18.75 at the close, from $18.49 on Wednesday, sparked by renewed accumulation of spread holdings, analysts said. On Tuesday, the spread ballooned to $20.71, before dropping off. The record is $27.88, struck on October 14.

Brent crude trading volume rose 19.5 percent against its 30-day average and U.S. crude was up 2.9 percent to its 30-day average, Reuters data showed.


European middle distillates stockpiles dipped in January by 1.9 percent from a month ago as a late cold spell gripped the region, data from industry monitor Euroilstocks showed, stimulating some demand for heating oil fuels.

Americans filing new claims for unemployment benefits unexpectedly fell 15,000 to 358,000 last week, with the four-week average hitting the lowest since April 2008, data from the U.S. Labor Department showed.

On Wednesday, Iran’s ambassador to Moscow said Tehran was capable of carrying out military strikes on U.S. interests all around the world if the Islamic Republic is attacked by the United States.

The United States has announced no such plans, though it has maintained that military action was on the table if Iran cannot otherwise be prevented from developing atomic weapons, which Iran denies. The U.S. has instead imposed sanctions against Iran and the EU has moved to ban Iranian crude by July.


Some reports on the day were bearish for crude oil.

China’s implied oil demand is likely to grow by a less-than-average 5 percent this year to 9.9 million bpd, the research arm of top state energy group CNPC said, as a slowdown in economic growth caps fuel consumption.

OPEC’s seaborne oil exports, excluding those from Angola and Ecuador, will rise by 70,000 bpd to 23.22 million bpd in the four weeks to February 27, UK consultancy Oil Movements said a weekly estimate.

Additional reporting by Robert Gibbons in New York, Zaida Espana in London and Manash Goswami in Singapore; Editing by Marguerita Choy

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