Oil rises above $73 on Greek bailout hopes

By Rebekah Kebede

NEW YORK (BestGrowthStock) – Oil rose over 2 percent on Tuesday as reports of a possible aid package for the troubled Greek economy sent Wall Street higher, weakened the U.S. dollar and supported oil prices.

U.S. crude prices for March delivery rose $1.76 to $73.65 a barrel by 1:32 p.m. EST after hitting a high of $74.15. At the end of last week, prices briefly dipped below $70 a barrel to the lowest level since mid-December.

ICE Brent crude rose $1.86 to $71.97.

“The oil market is reacting to the reactions in the S&P 500. If that ticks higher, we’re going higher,” said Tim Evans, energy analyst for Citi Futures Perspective.

Although Germany denied reports that a decision had already been made to extend an aid package to Greece, the S&P 500 remained up about 1.6 percent in the early afternoon and the Dow was up 1.9 percent.

By midday Tuesday, the U.S. dollar was off a recent 8-1/2 month high against the euro.

Oil tends to rise when the dollar falls, making crude and petroleum products cheaper for nondollar buyers. Weakness in the dollar also encourages investors to move into more tangible investments such as commodities.

Wall Street rose broadly on Tuesday, with the Dow on track for its largest daily percentage gain since July. (.N: )

Traders look to equity markets for signs of a broader economic recovery which could revive flagging oil demand.

Heating oil futures led the oil complex gains on Tuesday as snowy conditions in the U.S. Northeast, the world’s top heating oil consumer, was expected to boost demand for the fuel.

Heating oil demand is expected to be 7.6 percent above normal this week, the National Weather Service said on Monday.

IRAN SANCTIONS

Geopolitical tensions over Iran’s nuclear program also helped to underpin oil prices, analysts said.

The United States on Tuesday called for a U.N. sanctions resolution on Iran within weeks after Iran announced that work had begun to make higher-grade nuclear fuel.

The Islamic Republic denies its program has military aims.

Sanctions against Iran could prompt the nation to retaliate by reducing crude oil output or blocking exports traveling through the Strait of Hormuz, through which some 40 percent of the world’s globally traded oil passes.

Continuing problems with militants in oil-producing Nigeria also contributed to crude oil gains.

The market will later look to the release of the weekly U.S. oil inventory data from the American Petroleum Institute and the Energy Information Administration.

The API data due out at 4:30 p.m. EST may provide clues about the pace of fuel demand recovery. The EIA said Tuesday it will decide Tuesday afternoon whether or not to delay its weekly data, normally released on Wednesdays at 10:30 a.m. EST, this afternoon.

U.S. crude oil inventories likely rose last week by 1.2 million barrels and distillates fell 1.7 million barrels, a preliminary Reuters poll of nine analysts showed on Monday.

Investment Research

(Additional reporting by Emma Farge in London, Jennifer Tan in Singapore; editing by Keiron Henderson)

Oil rises above $73 on Greek bailout hopes