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UPDATE 11-Brent higher on euro rise, optimism on Greece

Published 06/27/2011, 03:54 PM
CL
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* Market eyes Greece's vote on tax hikes, spending cuts

* Euro bounce off low, dollar weakness, supportive to oil

* Coming up: API oil data, 4:30 p.m. EDT on Tuesday (Updates with Brent settlement and inventory forecast)

By Robert Gibbons

NEW YORK, June 27 (Reuters) - Brent crude prices rose on Monday, bouncing off lows as the euro rallied against the dollar on firmer hopes Greece will pass an austerity program as Europe fashioned a solution to Athens' debt woes.

Worries about the sluggish global economy and slower growth in China kept U.S. crude hemmed in negative territory, but both contracts were lifted off lows as the euro rallied against the dollar in a volatile session ahead of the Greek parliament's key vote on austerity measures this week. [USD/]

"The market is very receptive to foreign exchange moves and the euro's rally against the dollar and the dollar index weakness helped bring crude off its lows," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

ICE Brent crude for August rose 87 cents to settle at $105.99 a barrel, having swung between an early $102.28 low and the intraday peak of $106.40.

U.S. August crude fell 55 cents to settle at $90.61 barrel, above that key $90 handle after dropping to $89.61, just above the front-month crude 250-day moving average of $89.45.

Brent trading volumes were above the 30-day average and outpaced U.S. crude, though both contracts slumped from Friday's volumes. U.S. volumes were below the 30-day average.

Brent's premium to U.S. light sweet crude benchmark West Texas Intermediate narrowed to below $13 a barrel intraday on Monday before bouncing back above $15.

The spread was above $19 last Wednesday, the day before consuming nations announced a release of oil reserves.

GREECE'S DEBT WOES

France offered a solution for banks to roll over holdings of Greek debt for 30 years as the Athens government fought to get back-bench rebels to back a crucial austerity plan to avert bankruptcy. [ID:nLDE75P0BM]

"We started the day worrying about Greece's debt problems and impact on markets, but the news that French banks have an outline agreement to roll over maturing Greek bonds helped lift the euro and aided in stabilizing crude futures from early lows," Phil Flynn, analyst at PFGBest Research in Chicago said.

But Flynn and others said the concerns persist about slowed growth and the global economic recovery.

Fears of a slowdown in China resurfaced after Premier Wen Jiabao signaled for the first time the country would struggle to meet its 4 percent inflation target this year, raising the specter of more measures to cool the economy. [ID:nL3E7HR064]

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Graphic package on reserves: http://r.reuters.com/xew32s

PDF on IEA oil stocks release:

http://link.reuters.com/jac42s

Graphics on key economic indicators:

http://r.reuters.com/pad89r

Graphics on euro zone struggle:

http://r.reuters.com/hyb65p

TOP NEWS on Libya & Middle East crisis: [ID:nTOPMEAST]

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IEA AND OPEC

Crude oil prices slumped last week after Thursday's decision by the International Energy Agency to release 2 million barrels per day of oil reserves over 30 days to address the loss of Libya's 1.2 million bpd of crude oil exports.

The IEA issued details of the breakdown of the stocks release. The United States is making available 30 million barrels of crude. Japan and South Korea and Europe will release a mix of crude and refined products stocks. [ID:nL6E7HR1O8]

Analysts and traders see the reserves release helping ease concerns that the Organization of the Petroleum Exporting Countries (OPEC) will struggle to meet demand as consumption in emerging nations rises.

OPEC continued to express its dismay at that IEA action.

The IEA order to release reserves should be halted immediately, OPEC's Secretary General said on Monday at the end of cooperation talks with the European Union. [ID:nLDE75Q0RA]

Iran's caretaker oil minister Mohammad Aliabadi told reporters he was concerned about consumer nations' releasing strategic reserves. [ID:nL9E7HR02S]

Investors will get snapshots of U.S. inventories in weekly reports, starting with data from the industry group American Petroleum Institute late on Tuesday.

Crude stocks were expected to have fallen last week, with gasoline and distillate stocks up, according to a Reuters survey of analysts on Monday. [EIA/S] (Additional reporting by Gene Ramos in New York, Zaida Espana in London and Florence Tan in Singapore; Editing by David Gregorio and Sofina Mirza-Reid)

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