Oil jumps above $92 after Europe debt plan

[October 27, 2011]  SINGAPORE (AP) -- Oil prices jumped above $92 a barrel Thursday in Asia after European leaders agreed on a plan to reduce Greece's debt burden.

Benchmark crude for December delivery was up $1.89 at $92.09 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.97, or 3.2 percent, to settle at $90.20 in New York on Wednesday.

Brent crude was up $1.27 at $110.18 a barrel on the ICE Futures Exchange in London.

EU President Herman Van Rompuy said early Thursday that policymakers struck a deal that will reduce Greece's debt to 120 percent of its GDP in 2020. The plan calls on banks to accept 50 percent losses on their Greek bonds.

Van Rompuy also said nations that use the euro common currency and the International Monetary Fund will give Greece another euro100 billion ($140 billion).

Investors cheered the accord as a first step toward containing Europe's sovereign debt crisis. The Dow Jones industrial average gained 1.4 percent on Wednesday and stock markets in Asia and Europe rose Thursday.

"This could be a turning point for the eurozone debt crisis," said Victor Shum, an analyst with energy consultancy Purvin & Gertz in Singapore. "It's a significant development that private investors have agreed to take a 50 percent haircut on Greece."

Crude has jumped about 21 percent from $75 on Oct. 4 amid growing investor optimism that the U.S. economy will avoid a recession this year. Shum said he expects oil to trade near $100 by the end of the year.

In other Nymex trading, heating oil rose 2.8 cents to $3.05 per gallon and gasoline futures gained 3.9 cents at $2.66 per gallon. Natural gas fell 1.0 cents at $3.58 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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