Oil prices were rise today amid signs of progress in Europe’s efforts to resolve its fiscal problems. Yesterday’s EU summit resulted in an agreement to tighten fiscal discipline within the euro zone by introducing automatic penalties for countries that breach their budget deficit targets.
All EU members except for Britain and the Czech Republic signed the deal.
In the meantime, Greece appears to be inching closer to reach an agreement with its private bondholders, which would allow it to reduce its debt pile by up to €100 billion and secure the next €130 billion bailout package from the EU and the IMF to avert a disastrous default.
Prime Minister Lucas Papademos said “considerable progress” has been made in negotiations with the private creditors and indicated that a deal could be in place before the end of the week.
Demand for crude futures in London and New York received more support from reports that German Chancellor Merkel has urged the world’s second largest energy consumer China to reduce its dependence on Iranian oil coupled.
Meanwhile, traders feared that the Middle Eastern country, which is accused of illegally developing a nuclear weapon, could cut off supplies to Europe and other major customers.
Secretary general of the Organization of Petroleum Exporting Countries (OPEC) Abdalla Salem el-Badri added fuel to the fire, stating that the tensions between Iran and the West could reduce investments in the oil and gas sector.
In an interview with the Dow Jones Newswires, el-Badri said the situation could hurt the economy if it led to a sharp hike in oil prices.
US light, sweet crude for March delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rose US$1.07 to US$99.85/barrel in morning trade in New York.
March Brent crude added 81 cents to reach US$111.66/barrel on the ICE Exchange this afternoon.
Today’s top risers in the oil and gas sector were:
Sirius Petroleum (LON:SRSP), up 19.5 percent at 5.82 pence at midday
Nostra Terra Oil & Gas (LON:NTOG), up 10.5 percent at 0.48 pence
Forum Energy (LON:FEP), up 10 percent at 71.5 pence
Xtract Energy (LON:XTR), up 8.5 percent at 2.22 pence
Exillon Energy (LON:EXI), up 6.5 percent at 252 pence
The top fallers were:
Global Petroleum (LON:GBP), down 10.5 percent at 12.5 pence at midday
Matra Petroleum (LON:MTA), down 10.5 percent at 0.7 pence
Frontera Resources (LON:FRR), down 10 percent at 1.24 pence
IGas Energy (LON:IGAS), down 8 percent at 48.5 pence