Oil above $84 as Greece concerns ease after vote

[June 18, 2012]  SINGAPORE (AP) -- Oil hovered above $84 a barrel Monday in Asia after Greek election results suggested the country will stay in the euro common currency, reducing the risk of a major upheaval in financial markets and the world economy.

Benchmark oil for July delivery was up 23 cents to $84.26 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 12 cents to settle at $84.03 in New York on Friday.

In London, Brent crude for August delivery was up 58 cents at $98.19 per barrel on the ICE Futures exchange.

The conservative New Democracy party, which supports a bailout agreement Greece agreed to earlier this year, appeared to win enough votes Sunday to form a ruling coalition with another pro-bailout party.

Investors were bracing for a victory by parties that favored rejecting the austerity measures needed to ensure bailout money keeps flowing, a move traders feared could spark a financial crisis in Europe and beyond.

"In the short term, the markets will be confident that the election result will give Greece some breathing room," strategist Sean Darby of Jefferies Group said. "But longer term, investors cannot be assured that the political upheaval is over."

The Greek election result also boosted the euro, which underpinned crude prices. A weaker U.S. dollar makes commodities traded in dollars such as oil cheaper for investors with other currencies. The euro rose to $1.2680 on Monday from $1.2637 late Friday in New York.

This week investors will be closely watching central bank meetings, especially one by the U.S. Federal Reserve on Thursday, for signs policymakers plan to implement stimulus measures to boost flagging global economic growth.

"Greece's parliamentary elections would likely reduce near-term uncertainty and calm markets' nerves," Barclays said in a report. "Markets will now likely shift their focus to central bank meetings in the coming weeks. With growth still weak, expectations that central banks will provide support have increased."

In other energy trading, heating oil was up 1.8 cents at $2.66 per gallon while gasoline futures rose 1.8 cents at $2.64 per gallon. Natural gas gained 2.8 cents at $2.50 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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