The price of oil edged up to above $84 a barrel Friday on hopes that central banks stand ready to support global financial markets in case of turmoil following Greece's elections.
By early afternoon in Europe, benchmark oil for July delivery was up 36 cents to $84.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.29 to settle at $83.91 in New York on Thursday.
In London, Brent crude for August delivery was up 55 cents at $97.72 per barrel on the ICE Futures exchange.
Oil traders often look to stock markets as a barometer of overall investor sentiment. European stock markets rose Friday, following late gains on Wall Street the day before amid speculation central banks may announce stimulus measures to boost flagging global economic growth and soothe investors concerned about the future of the euro.
A turning point for the world economy and financial markets may come from elections in Greece this weekend which could determine if the country stays in the euro common currency. A sudden exit from the euro by Greece could spark panic and spread a financial crisis that undermines economic growth.
"Even allowing for a supportive outcome to Sunday's Greek elections, intractable debt problems in other countries such as Spain and Italy will still need to be addressed," energy traders and consultant Ritterbusch and Associates said in a report.
On Thursday, the Organization of Petroleum Exporting Countries said at a quarterly meeting in Vienna that the group would leave its crude production quotas unchanged. The cartel suggested it is ready to cut supplies quickly if crude demand slows sharply.
"Due to the lower prices and the massive global stock build, we forecast that Saudi Arabia will decrease production in the second half of the year to 9.5 million barrels a day, bringing the 2012 annual average down to 9.7 million barrels a day," said analysts at JBC Energy in Vienna.
Crude was also supported by the strengthening euro, which rose to $1.2612 from $1.2600 late Thursday in New York. A weaker U.S. dollar makes commodities sold in dollars such as oil cheaper for investors with other currencies.
In other energy trading, heating oil was up 1.71 cents at $2.6449 per gallon while gasoline futures rose 1.02 cents at $2.6866 per gallon. Natural gas gained 3.7 cents at $2.532 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
- Investment & Company Information
- New York Mercantile Exchange