Oil up in Asia on renewed Europe optimism

I / Singapore August 22, 2012, 9:35 IST

Crude oil prices rose in Asia today on growing hopes of imminent European Central Bank intervention to ameliorate the euro zone's debt crisis, analysts said.

New York's main contract, light sweet crude for October delivery, gained five cents to $96.89 a barrel and Brent North Sea crude for delivery in October added 10 cents to $114.74.

"Oil prices rose on Tuesday as hopes that the European Central Bank will act to contain the region's debt crisis boosted crude futures and sent the euro to a seven-week peak versus the dollar," Phillip Futures said in a report.

Traders' hopes of an ECB intervention grew yesterday after the interest rate, or yield, on Spanish 10-year bonds fell to 6.211% from 6.443%, with the rate dipping as low as 6.2070% in intraday trading.

Comments from senior members of German Chancellor Angela Merkel's party suggesting that Germany was more willing to give some leeway in the bailout of debt-wracked Greece also lent support to markets.

But IG Markets Singapore market strategist Justin Harper warned that the euro zone's troubles were far from over.

"Coming out of the danger zone for the time being doesn't automatically lead to the green grass of growth and prosperity. At best, a mild recession and stagnant growth awaits the euro zone," he said in a report.