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Brent rises above $112 on Greece bailout, U.S. economy

Published 07/03/2011, 11:02 PM
Updated 07/03/2011, 11:04 PM
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* Brent rises to as high as $112.08; WTI hits $95.30

* Quiet trading as U.S. markets closed for holiday

* Coming Up: Eurozone Sentix index July, 0830 GMT

* Eurozone Producer prices May; 0900 GMT

By Francis Kan

SINGAPORE, July 4 (Reuters) - Brent crude rose above $112 a barrel on Monday, after Eurozone policy makers approved an emergency bailout for Greece and strong U.S. economic data calmed fears of weakening demand in the world's largest oil consumer.

Euro zone finance ministers on Saturday approved a 12 billion euro installment of Greece's bailout and said details of a second aid package for Athens would be finalised by mid-September.

The news followed the release of data on Friday showing the pace of growth in U.S. manufacturing picking up for the first time in four months.

ICE Brent crude rose 13 cents to $111.90 a barrel by 0245 GMT, after rising as high as $112.08 earlier. U.S. crude was at $95.15 a barrel, up 21 cents.

"The US data and the eurozone news is helping oil prices today, although with U.S. markets closed for a holiday, trading will be thin and based very much on technicals, " ANZ Bank oil analyst Serene Lim said.

According to technical charts, Brent crude needs to clear a resistance at $113 a barrel before developing a decent rally towards a short-term resistance target at $121.47, while U.S. crude is expected to rise to $98.13 a barrel, says Reuters market analyst Wang Tao.

The U.S. economic data sparked a rally in Asian equities, with Japan's Nikkei rising near the 10,000 level for the first time in two months while Australian stocks gained 1 percent.

Oil markets will be looking for further signs of economic recovery to counter demand fears, after China's factory sector grew at its slowest pace in 28 months, data released on Friday showed.

The key U.S. non-farm payrolls report this Friday will be keenly watched by participants for evidence that the economy may be regaining traction, analysts said.

Any signs of a slowdown in China add to investor nervousness because of recent indications of sluggish U.S. economic growth and Europe's struggles with its debt crisis.

Oil prices were also boosted by a weaker dollar , which lost ground against a basket of currencies as the euro traded near a three-week high.

The single currency is rallying after Greece avoided a near-term default and on expectations that the European Central Bank will raise interest rates by 25 basis points when it meets this Thursday, analysts said.

The successful sale of 30 million barrels of crude by the U.S. Department of Energy also eased concerns over how the market would absorb the release of emergency oil stocks by the International Energy Agency.

"This is positive news as it implies the market's readiness to absorb the additional barrels," said Lim.

Some traders and analysts said the agency's planned 60 million barrel crude and oil product release has been badly coordinated outside the United States.

Weekly U.S. oil inventory data from the industry group the American Petroleum Institute and the government's Department of Energy will be delayed by a day to Wednesday and Thursday, respectively, due to Monday's Independence Day holiday.

(Editing by Ed Lane)

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