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World oil prices climb on faltering dollar
by Staff Writers
London (AFP) May 31, 2011

World oil prices soared on Tuesday as the dollar slid against the euro amid mounting speculation over another Greek bailout and as traders took heart from upbeat global economic data.

New York's main contract, light sweet crude for delivery in July, jumped $2.26 to $102.85 per barrel.

Brent North Sea crude for July rose $1.99 to $116.67 in late afternoon deals.

"Crude oil is up ... on dollar weakness," said SEB analyst Filip Petersson on Tuesday.

"In addition, crude oil is supported by bullish equity markets" after better-than-expected Japanese economic data," he said.

"These factors are helping Brent to push through the $115-per-barrel barrier that it has been struggling with for a while now."

The European single currency jumped as high as $1.4424 -- the highest level since May 6 -- amid reports that Greece could get a second bailout loan, helping ease the eurozone debt crisis.

A weaker dollar makes dollar-priced commodities -- such as oil -- cheaper for investors holding other currencies. That tends to boost demand and prices.

The top-selling Greek daily Ta Nea said Tuesday, citing sources in Brussels, that the country will receive a new loan in return for additional spending cuts and a faster rate of privatisations.

Meanwhile, the Wall Street Journal reported that Germany was considering dropping its push for a rescheduling of Greek debt in order to facilitate a new loan package.

"Prices surged as optimistic news about a potential second bailout package for Greece improved market sentiment, supported the euro and raised hopes about the eurozone's economic stability," Sucden oil analyst Myrto Sokou said.

"After a long holiday weekend in the United States and the UK, the markets (were) looking for some direction so the encouraging news about Greece's debt crisis was very welcomed."

European finance officials will meet in Vienna on Wednesday to thrash out Greece's debt problems, with a second bailout in exchange for new belt-tightening and sell-offs appearing more likely.

As an EU-IMF mission in Athens nears its conclusion, European diplomatic and governmental sources told AFP the meeting of junior finance ministers and national treasury officials is a regular gathering that prepares finance ministerial talks, the next due on June 20 in Brussels.

However, representatives of the 17 eurozone states will likely consider the implications for their finances of a second bailout request from Athens.

Tokyo shares closed nearly two percent higher Tuesday, lifted by an upbeat outlook from manufacturers in the world's number three economy, brokers said.

Japanese industrial production grew 1.0 percent in April from March, in the first sign of a tentative recovery from the March 11 quake-tsunami and nuclear crisis.

Wall Street raced ahead on Tuesday amid rising hopes for a solution to Greece's debt crisis and signs of recovery in post-quake Japan.

Markets in the US, the world's biggest oil consumer, were closed on Monday for the Memorial Day holiday.


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