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Oil mixed, sticks around 86 dollars

by Staff Writers
Singapore (AFP) May 3, 2010
Oil was mixed in Asian trade Monday, shedding initial gains made after Europe's endorsement of a massive aid deal for Greece and expectations of a US supply drop caused by a giant oil slick, analysts said.

New York's main contract, light sweet crude for June, edged down six cents to 86.12 dollars per barrel.

Brent North Sea crude for June delivery was up nine cents to 87.53 dollars a barrel.

The market had earlier found support from the EU's approval of a massive 110-billion-euro bailout package for debt-hit Greece, analysts said.

"There was a feeling that in the short run a severe economic problem in Europe has probably been averted for the time being and so there was probably some support there," Jason Feer, vice president of energy market analysts Argus Media, told AFP.

"But if you look at where prices are already, it seems to me to be difficult to justify running prices up some more just purely based on the bailout for Greece."

Eurozone finance ministers on Sunday endorsed the unprecedented bailout to save Greece from bankruptcy and shore up the single currency after Athens agreed to draconian spending cuts.

Prices had also won support from expectations that the huge oil slick in the Gulf of Mexico could lead to delays in the delivery of crude oil in the United States.

"The oil slick on the Gulf of Mexico, which is causing some oil tanker traffic to be delayed to that region, should result in a drawdown in stocks in Cushing in the US," Ben Westmore, an energy economist with the National Australia Bank said.

The US Department of Energy said in its weekly report last Wednesday that crude reserves increased by 1.9 million barrels in the week ending April 23, far more than market expectations of a gain of around 800,000 barrels.

Cushing in Oklahoma is the major transit point connecting Gulf Coast oil to consumers in the northern United States.

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