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Oil prices shoot higher

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oil-pricesGlobal oil prices rebounded sharply Tuesday on the falling greenback, which makes dollar-priced crude cheaper for buyers using stronger currencies.

US benchmark West Texas Intermediate (WTI) for June delivery jumped $1.09 to $60.34 a barrel.

Brent North Sea crude for June rallied $1.42 to stand at $66.33 in London midday trade.

“Crude oil prices rebounded strongly… supported by a softer US dollar, while investors remained cautious ahead of the release of the weekly oil inventories reports,” said Sucden brokers analyst Myrto Sokou.

The European single currency rose against the dollar on relief that crisis-hit Greece narrowly averted a default Tuesday that could have seen it crashing out of the euro.

Athens tapped an emergency account to meet a debt repayment of 750 million euros ($845 million) due Tuesday to the International Monetary Fund.

The oil market had fallen in earlier Asian deals on worries about a global oversupply after a veteran former energy minister in Qatar warned OPEC members against cutting output unilaterally.

Abdullah al-Attiyah, who led the energy portfolio in oil-rich Qatar for about two decades, said Monday that OPEC should first reach a binding agreement with non-members before reducing production.

“OPEC should not do anything because it is not the swing producer” of the past, Attiyah told reporters in Kuwait City.

“They cannot and will not cut (output) unless the main producers outside OPEC join forces,” he said.

The 12-nation Organisation of Petroleum Exporting Countries (OPEC) in November maintained output levels despite tumbling prices.

The group, led by de-facto kingpin Saudi Arabia, pumps about 30 percent of global crude.

Nicholas Teo, analyst at CMC Markets in Singapore, added that concerns over a persistent global oversupply “continue to put a cap on oil prices”.

Those worries were compounded by the latest US data showing petroleum drilling is picking up in some areas.

The closely watched Baker Hughes US oil rig count fell by just 11 to 668 last week.

Dealers have been hoping that a slowdown in US shale output could help ease the build up of global crude reserves, which was a key reason for the collapse in prices of more than 50 percent between June and January.

Overall crude reserves in the United States likely fell by 500,000 barrels in the week to May 8, according to a survey of analysts by Bloomberg News.

The US Energy Department will release the official stockpiles figures on Wednesday.

 


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