NEW YORK (DTN) — New York Mercantile Exchange oil futures rebounded during overnight trade, riding a rally for global equities after Greek lawmakers approved a package of new austerity measures over the weekend that should clear the way for a sec
ond bailout needed by Athens to avoid default.
European Union finance ministers are now scheduled to meet Wednesday in Brussels to sign off on a $170 billion bailout Greece needs to pay bondholders next month. Greece will still need to convince EU ministers it will follow through on the measures before getting the funds, but investors were encouraged this morning by the vote.
The issue is important for oil traders because if Greece can’t solve its debt problems, it could affect other euro zone countries, which could lead to an economic slowdown and lower oil demand, said analysts.
Major euro zone bourses rallied as risk trade returned, and U.S. stock indices are heading for higher open on Wall Street. The euro rebounded to a two-week high against the dollar, with a weaker dollar supporting higher oil futures.
Oil futures also continue to be boosted by ongoing tension between Iran and the West over Tehran’s nuclear ambition, which triggered an EU oil embargo scheduled to start on July 1, and violence in Syria that has added a risk premium and worries about supply.
Perhaps seeking to further inflame the tension, Iranian President Mahmoud Ahmadinejad said on Saturday that Tehran will soon announce advances in its nuclear program.
“Crude oil markets are buoyant in early trade today, supported by amplifying geopolitical undertones, while healthy underlying demand remains,” said a note from Barclays Capital.
Meanwhile, there were signs of progress in Africa after Sudan and South Sudan on Sunday agreed to resume talks over disputed transit fees that led to the shutdown of 350,000 bpd oil output nearly two weeks ago.