Brent hovers near $120, buyers take less Iran

Wednesday, 22 February 2012 00:01 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Brent crude futures held steady near $120 a barrel on Tuesday as the euro zone approved a second bailout package for debt-laden Greece, while a cut in Chinese and European imports of Iranian oil supported prices.

Euro zone finance ministers struck a deal early on Tuesday to finance Greece with a 130-billion-euro rescue package, averting an imminent bankruptcy while also boosting the demand outlook for commodities.

Brent fell 1 cent to $120.04 by 0715 GMT after closing above $120 on Monday for the first time since June 15.

U.S. crude was at $104.93, up $1.69, after touching $105.44 on Monday -- its highest since May 5. The New York Mercantile Exchange did not issue a settlement price on Monday because of a holiday and the contract expires on Tuesday.

Oil prices rose briefly on news of the much-awaited bailout deal for Greece while the euro jumped and Asian equities pared losses.

“There was a fair bit of positive news already priced in by markets,” Ben Le Brun, a Sydney-based markets analyst at OptionsXpress, said.

The deal resolves Greece’s immediate financing needs but seems unlikely to revive the nation’s shattered economy.

“Scepticism remains as to whether Greek politicians will be able to deliver the reforms at the required pace, especially after the Greek elections in April,” ANZ bank analysts said in a note.

But oil prices are expected to be supported as western sanctions bite into oil supply from Iran, OPEC’s second largest producer.

Crude buyers globally are being pressured by the West to reduce Iranian imports, with the United States and the European Union imposing new economic sanctions targeted at reducing Tehran’s oil revenue over its controversial nuclear programme.

Top Iranian crude buyer China will import less oil from Tehran this year, while European countries are also cutting purchases ahead of an embargo.