NEW YORK - Crude oil futures prices settled higher Thursday on growing optimism that the Greek debt-swap deal will be approved, and on rising equities.
Major Greek and European banks have signaled support for the plan, apparently smoothing its approval. Greece is set to announce the results Friday at 0600 GMT.
The euro was buoyed by the developments, pushing the dollar down and sparking bargain-buying in oil futures by investors using other currencies.
"There is a feeling that if the Greek situation is sorted out, that would solve all the problems in Europe," said Matt Smith, analyst at Summit Energy. But there is strong concern that North Sea Brent crude prices, nearing the $130-a-barrel level where they last settled in July 2008, could deal a blow to the global economy. Brent traded to record highs Thursday in euro and British pound terms.
Light, sweet crude oil for April delivery on the New York Mercantile Exchange was up 42 cents, at $106.58 a barrel. ICE North Sea Brent crude for April settled $1.32 higher, at a one-month high of $125.44 a barrel. The spread between the contracts also hit a one-month high of $18.86 a barrel at the settlement.
The U.S. benchmark price trails Brent as crude oil inventories at Cushing, Okla., the delivery point for the Nymex contract, have gained 12.5% in the past two weeks and stand at the highest level since July. Further builds are expected in coming weeks, ahead of the opening in June of the reversed Seaway pipeline, which has been worked over to move oil out of Cushing into the key Gulf Coast refining region. The Seaway move is a big step toward resolving a logistical issue that has caused sharp price distortions between the two benchmarks.
Brent's gains outpaced those of the U.S. benchmark crude, amid signs that physical supplies of North Sea crude will be tighter in April than in March. Meanwhile, Asian buyers are showing stepped-up interest in North Sea barrels, underpinning prices, as the U.S.-led push for sanctions on Iran has some buyers limiting purchases from that nation, which is the second-biggest oil producer in the Organization of Petroleum Exporting Countries.
Jim Ritterbusch, president of Ritterbusch and Associates, said he sees $130 a barrel Brent "as easily attainable within about a two-week time frame." Sustained prices at that level pose a risk, analysts said.
"We believe the global economy cannot afford oil prices above $130 a barrel," said Francisco Blanch at Bank of America Merrill Lynch. At that price, energy's share of global gross domestic product would hit 9%, a "severe crisis" point for the world economy.
Blanch said in a report that a mild recession in Europe and the general weak global economy should lift oil inventories in the major industrialized nations in the second quarter of 2012, allowing Brent to average $106 a barrel for the first half. Brent is averaging around $116 a barrel so far this year, up about 14% from a year ago.
U.S. gasoline prices are linked to Brent prices, and futures settled at levels that suggest a $4-a-gallon national average soon at the pump.
April reformulated gasoline blendstock futures settled 2.66 cents higher at $3.314 a gallon. Given the traditional 70-cent-a-gallon differential between futures and retail prices, this suggests a potential return to an average $4 a gallon at the retail level. Prices came within 3.5 cents of that level last May and haven't topped that mark since July 2008. Government forecasters said this week they expect prices for the month of May to average just below that level.
Rising prices, which have hit monthly record highs since October, are steering a sharp drop in gasoline use. U.S. data released Wednesday showed demand in the last four weeks posted a 7.8% decline from the same period last year. That's the biggest year-on-year decline in any four-week period since 1991.
Heating oil for April delivery settled 5.01 cents higher at $3.2695 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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