Crude takes a big jump

Greece deal and tensions over Iran supplies push up crude prices

Crude prices ended substantially higher on Tuesday, 21 February 2012 at Nymex. Crude-oil futures shot up boosted by news that Greece and the European Union have finally secured a debt-restructuring deal. Supply disruptions from Iran added to the ongoing geo political tensions over there further pushing prices higher. U.S. markets were closed Monday for the Presidents Day holiday.

Light and sweet crude for March delivery rose $2.6 (2.5%) to $105.84 a barrel on the New York Mercantile Exchange on Tuesday. Prices rose to a high of $106.07 during intra day trading. Price fell 0.4% for the month of January.



Latest news indicate that eurozone officials finally agreed to give flagging Greece another round of bailout funds. In Brussels, euro-area finance ministers approved another rescue for debt-encumbered Greece. The 130 billion euros, or $173 billion, financial package still left doubts, however, about how durable the fix would prove. Also, a private-sector bond swap is set to be launched this week. Private bondholders will take writedowns of 53% on the value of their holdings, up from an earlier proposal for haircuts of around 50% agreed in March.

The decision by China's leaders to reduce the reserve requirement ratio on their country's banks also gave a boost to prices.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell initially but ultimately rose by almost 0.14%. The dollar edged up against the euro on Tuesday in the wake of a euro-zone agreement to approve a long-awaited bailout for Greece.

U.S. stocks gained and bonds fell, indicating the deal made investors feel more confident shifting to riskier from safer assets, which initially boosted the euro.

In a latest development, Iran announced on Monday it had halted oil sales to the U.K. and France. This pushed up oil prices further. The European Union has imposed an embargo on Iran, with oil exports to be halted in July, to force Tehran back to negotiations over its nuclear program.

Among other traded energy products on Tuesday, March gasoline added 5 cents, or 1.8%, to finish at $3.07 a gallon. March heating oil gained 5 cents, or 1.6%, to $3.24 a gallon.

Natural-gas futures bucked the trend, with the March contract losing 6 cents, or 2.2%, to settle at $2.63 per million British thermal units.

At the MCX, crude oil for March delivery closed higher by Rs 6 (0.11%) at Rs 5,219/barrel. Natural gas for February delivery closed lower by Rs 0.6 (0.5%) at Rs 128.4.