Oil prices up after US stock report
Posted: 29 April 2010 0543 hrs

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An Iraqi oil refinery.


NEW YORK: World oil prices rose dramatically late Wednesday, after a day of being rocked by the Greek crisis and the strengthening dollar.

New York's main contract, light sweet crude for June, rose 78 cents to 83.22 dollars a barrel.

London's Brent North Sea crude for June rose 38 cents to 86.16 dollars per barrel.

A late rally overcame a downward trend throughout the day.

"They waited till the last minute to show their hands," said Ellis Eckland, an independent analyst.

As markets prepared to close, news trickled in that the US Federal Reserve had kept interest rates at ultra-low levels, further stimulating the economy.

Earlier, the US Department of Energy (DoE) said crude reserves increased by 1.9 million barrels in the week ending April 23, indicating weaker demand.

Market expectations had been for a gain of around 800,000 barrels.

"People were expecting those terrible inventories numbers, now they're going long because they think the trend is going to change." Eckland added.

Crude oil had also fallen earlier Wednesday on heightened concerns about a Greek financial crisis after its sovereign debt was slashed to junk status, fanning fears of a default.

Barclays Capital analysts said that the market was "sharply pressurised by rising concerns over Greece's debt problems."

A fierce global equities sell-off began on Tuesday after ratings agency Standard & Poor's cut Greek debt to junk, while a downgrade to Portugal also stoked concerns about a widening eurozone crisis.

In the foreign exchange market on Wednesday, the European single currency plunged to 1.3143 dollars - a low last seen in April 2009.

A stronger US currency makes dollar-denominated crude oil more expensive to holders of weaker units, dampening demand and leading to lower prices.

"S&P's cutting Greek sovereign debt to junk status, along with their downgrading of Portugal's rating, sent shivers through the euro against other currencies and global markets, with all the expected consequences," said PVM oil analyst Philip Wiper.

"Stock markets worldwide fell more than two percent (on Tuesday) and oil prices inevitably went with them."

Greece faces a May 19 deadline to repay nine billion euros (12 billion dollars) in maturing debt. The downgrade by credit ratings agency S&P effectively shuts down its access to private capital. - AFP/de

My comment
Oil prices rose late Wednesday, due the Greek’s financial crisis. Due to this financial crisis caused by Greece, Light Sweet Crude and London Brent’s North Sea Crude rose at 78 cents to 83.22 dollars and a 38 cents to a 86.16 dollars respectively. In order to stimulate the economy, the US Federal Reserve kept its interst rates to at bay. Given that Greece is currently facing financial crisis, its crude oil prices had fallen, as well as its outstanding debts of 9 billion Euros. The reason as to why I choose this article is because I feel that a financial problem faced by any particular country across the globe will affect the rest of the world worldwide financially and economically. For example, as reported in the article above, stock markets worldwide fell to more then 2% and oil prices inevitably went with them. In my opinion, I feel that the rest of the globe shoyld not just sit on fences and do nothing about it. Although Greek’s financial crisis solely affected Greece and US, it was reported that sotck markets worldwide were affected. Even though Singapore is just a small country, we should also try out utmost best to help Greece solve its financial crisis as soon as posible, in order to keep the economy back on track.

http://www.channelnewsasia.com/stories/afp_world_business/view/1053273/1/.html
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