Oil rises as Greece moves to salvage bailout

[November 07, 2011]  SINGAPORE (AP) -- Oil prices hovered above $94 a barrel Monday in Asia after Greek leaders agreed to a coalition government that will likely approve an European Union-led bailout package.

Benchmark crude for December delivery was up 5 cents at $94.31 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 19 cents to settle at $94.26 in New York on Friday.

Brent crude was up 53 cents at $112.50 a barrel on the ICE Futures Exchange in London.

Greece's embattled prime minister and main opposition leader agreed Sunday to form an interim government to ensure the country's new European debt deal, capping a week of political turmoil that saw Greece face a catastrophic default that threatened its euro membership and roiled international markets.

Prime Minister George Papandreou also agreed to step down halfway through his four-year term. Any interim government that is formed with the support of both major parties will be almost guaranteed to push the European rescue package through parliament, which would provide Greece with an additional $179 billion (euro 130 billion) in rescue loans and bank support.

Crude has jumped about 25 percent from $75 on Oct. 4 amid growing investor optimism that Europe will be able to at least temporarily contain its sovereign debt crisis. However, some analysts say the crisis has already undermined economic growth.

"Even if a reasonable temporary solution is achieved (in Greece), debt problems in Italy will continue to provide an obstacle to sustainable European economic growth," energy consultant Ritterbusch and Associates in a report. "We look for the eurozone to continue to provide a mix of headlines that will keep trading quite volatile."

In other Nymex trading, heating oil rose 1.4 cents to $3.08 per gallon and gasoline futures jumped 2.2 cents to $2.69 per gallon. Natural gas slid 4.4 cents at $3.74 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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