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Oil prices rise further in Asia

Oil prices

Singapore:  Oil prices extended their gains in Asia today on expectations of a decline in US crude inventories and robust economic data from the eurozone, analysts said.

US benchmark West Texas Intermediate for August delivery was up 12 cents at USD 61.13 a barrel and Brent climbed 11 cents to USD 64.56 in late-morning trade.

Both contracts also ended higher on Tuesday as traders bet on a fall in stockpiles when the US Department of Energy releases its weekly report later today, indicating strong demand in the world’s biggest economy.

In the eurozone, business activity rose sharply in June to hit a more than four-year high, which analysts said suggested a better-than-expected recovery in the making, while Greece closes in on a debt reform deal with its creditors.

The closely watched Markit Economics Composite Purchasing Managers Output Index (PMI) came in at 54.1 points in June, up from 53.6 in May, for its best performance since May 2011.

Any reading above 50 points suggests expansion.

Eurozone finance ministers will meet today to work on details of a new bailout for Greece after it submitted proposals at the start of the week, fanning hopes for a breakthrough after five months of stalemate.

A full European Union summit is slated for tomorrow.

Greece is up against a deadline of June 30 to repay the International Monetary Fund around 1.5 billion euros (USD 1.7 billion). Failure to pay will see it default and possibly crash out of the eurozone, or even the EU.

However, Bernard Aw, market strategist at IG Markets Singapore, warned: “While the mood for the negotiations has definitely turned positive and constructive, I think it may be premature to pin too much hopes on a ‘done deal’.”

He said Greek Prime Minister Alexis Tsipras still needed to convince his anti-austerity party to approve concessions needed to unblock bailout funds.

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