Crude Oil Rises in N.Y. as Juncker Eases Greek Debt Concerns

MARK SHENK | JUNE 2011 | SOURCE: Bloomberg

Crude oil rose in New York as Luxembourg’s prime minister, Jean-Claude Juncker, assured investors a solution will be found to Greece’s debt crisis.

Futures climbed 0.3 percent after Juncker said Greek Prime Minister George Papandreou had assured him the government would do everything to ensure financial aid. He also said Italy was not in danger from the euro area’s debt crisis. Prices slid 2 percent before Juncker’s comments on concern Greece’s debt crisis would weaken the global economy and curb fuel demand.

Crude Oil Rises in N.Y. as Juncker Eases Greek Debt Concerns

“The market is getting some reassurance,” said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage LLC in New York. “Crude oil is near the bottom. $90 is a fair value and I don’t think there is a lot of concern to see it plunge under $90.”

Pressure on Greece

Euro-area finance ministers pushed Greece to cut its deficit and sell state assets. They left open whether the country will get the full 12 billion euros ($17.1 billion) promised for July as part of a bailout agreed on last year, Juncker said after chairing a crisis meeting in his country.

“Market participants will be paying attention to every comment from a European finance minister or any major protest in Athens,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “These comments and events will send prices moving in either direction.”

Japan Exports

Japan’s exports decreased 10.3 percent in May from a year earlier after April’s 12.4 percent drop, the Finance Ministry said today. The median estimate of 25 economists surveyed by Bloomberg News was for an 8.4 percent decline.

Crude also rose as the Centre for Global Energy Studies said Saudi Arabia and the three other Persian Gulf states in OPEC who pledged on June 8 to increase supplies will be “cautious” in raising output to avoid weakening prices.

CGES, a non-profit think tank founded by former Saudi Arabian Oil Minister Sheikh Ahmad Zaki Yamani, forecasts that OPEC will provide an average of 29.6 mbpd during the third quarter, less than the 30.9 million that OPEC projects is needed.

Adequate Supplies

Saudi Arabia, Kuwait, the United Arab Emirates and Qatar agreed to keep consumers adequately supplied this year after talks with other members of the Organization of Petroleum Exporting Countries collapsed on June 8 without an accord.

Oil fell earlier in the day on speculation a weakening global economy will reduce energy demand.

The International Monetary Fund cut its forecast for U.S. growth in 2011, warning of setbacks to the economy and potential contagion from the debt crisis.

Related article: Global stagflation leads to diminished oil demand

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