Will expectations of a Euro-zone bailout of Greece trigger higher commodity prices?
*Reuters, by Christopher Johnson, February 11, 2010
”Oil climbed to around $75 a barrel on Thursday, buoyed by hopes of a rescue plan for the beleaguered Greek economy and by upbeat predictions of oil demand growth by two major forecasters.
European Union leaders met in Brussels on Thursday to agree on a financial bailout for Greece, a package that will demand deep fiscal and economic adjustments by Athens.
The euro rose against the dollar on Thursday as investors increasingly anticipated that the EU, led by Germany and France, would help Greece avoid default.
In other supportive news, the International Energy Agency said on Thursday global oil demand would grow by 120,000 barrels per day (bpd) more than previously expected in 2010 to average 86.5 million bpd.
The forecast was in line with the latest projections from the U.S. Energy Information Administration, which on Wednesday predicted world oil demand would rise 1.2 million bpd in 2010.
The EIA also expects oil prices to average $81 a barrel in the second half of the year, up 9 percent from current levels.
U.S. crude for March delivery jumped 61 cents to $75.13 a barrel by 1118 GMT, after settling 77 cents higher at $74.52 a barrel on Wednesday. London Brent crude rose 75 cents to $73.29.
‘Everyone is waiting for the outcome of today’s EU summit on a rescue for Greece,’ said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
‘The market hopes there will be a bailout, which would raise risk appetite and should boost the euro against the dollar, both factors that should support oil prices.”
A bailout of Greece could alleviate worries about the fiscal health of the euro zone, increasing demand for riskier assets such as commodities and oil.”
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