Oil climbs 2.5 pct ahead of Greek austerity vote

AP News
Posted: Jun 28, 2011 3:40 PM
Oil climbs 2.5 pct ahead of Greek austerity vote

Oil climbed more than 2 percent Tuesday ahead of a vote in Greece to approve tough new financial reforms that would shore up its beleaguered economy.

Benchmark West Texas Intermediate gained $2.28, or 2.5 percent, to settle at $92.89 per barrel Tuesday on the New York Mercantile Exchange. In London, Brent crude added $2.79, or 2.6 percent, to settle at $108.78 per barrel on the ICE Futures Exchange.

On its own, Greece's financial trouble wouldn't normally move world oil prices. But analysts say that if the country fails to pay its bills, its problems could spread to neighboring countries and undercut the European Union's economy.

The euro strengthened against the dollar, and that pushed oil higher. Oil, which is priced in U.S. currency, tends to rise as the dollar weakens and makes crude barrels cheaper for investors holding foreign money.

Greek lawmakers will vote Wednesday and Thursday on a $40 billion austerity plan. Riots broke out in Athens Tuesday as lawmakers mulled new taxes, spending cuts and other reforms. The austerity plan is required for the country to receive bailout money from the European Union and the International Monetary Fund.

Oil rose despite another weak reading on consumer confidence in the U.S., the world's largest petroleum consumer. A private research group said consumer confidence slipped to a seven-month low on heightened job worries.

MasterCard SpendingPulse reported in its weekly survey that consumers bought an average of 390.3 million gallons of gas per day in the four weeks ended June 24, down 0.2 percent from the same period last year. That's the 14th consecutive decline for the four-week average in MasterCard's survey, which is based on credit card purchases.

Meanwhile, retail gasoline in the U.S. dropped to a national average of $3.551 per gallon. A gallon of regular unleaded is 23.9 cents cheaper than it was last month, but it's still 79.5 cents higher than the same time last year.

In other Nymex trading for July contracts, heating oil added 6.01 cents to settle at $2.8415 per gallon and gasoline futures added 7.12 cents to settle at $2.8156 per gallon. Natural gas rose 10.1 cents to settle at $4.357 per 1,000 cubic feet.