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Oil prices steady as market digests Greek debt deal

Oil prices steadied on Tuesday, trading within a narrow range after eurozone ministers and the International Monetary Fund clinched a deal overnight to release fresh loans to debt-plagued Greece.

Brent North Sea crude for delivery in January eased 11 cents to $110.81 a barrel in midday trade.

New York’s main contract, light sweet crude for January or West Texas Intermediate (WTI), added four cents to $87.78 per barrel.

“Crude oil prices consolidated within the recent range on Tuesday, as investors ... remain cautious with a new Greek deal agreed overnight,” said Sucden Financial analyst Myrto Sokou.

Later on Tuesday, traders will also absorb a raft of data in top oil consumer the United States.

“The main focus will switch to the release of the US durable goods and new orders figures for October, as well as Richmond Fed data and the details from the US Fed Beige book that could provide an interesting insight about the US economic conditions,” Sokou added.

Crude futures had rebounded in earlier Asian trade as the Greek agreement eased concerns that Greece’s problems could spiral out of control, shake the global economy and dent oil demand.

After marathon talks in Brussels, the eurozone and the IMF agreed to unlock 43.7 billion euros ($56 billion) in loans and grant significant debt relief going forward for decades to come.

Greece has been at the centre of a raging debt crisis in the eurozone, a major market for exports from developing countries, and there were fears the problem could affect the global financial system if left unresolved.

“One of the market’s uncertainties has been greatly reduced overnight and the initial market reaction has been positive,” added PVM oil brokers analyst Tamas Varga.

“The eurozone and the IMF have finally come to an agreement concerning the Greek debt, and now the next tranche, totalling 43.7 billion euros of much-needed bailout money, can be released.”

The oil market was also roiled by fears over the looming “fiscal cliff” in the United States — a combination of tax hikes and spending cuts set to take effect on January 1 barring a compromise among US lawmakers.

“The other uncertainty, the US fiscal cliff, is still in front of us,” added Varga.

“The White House is expected to veto any bill that attempts to avoid the cliff by not increasing tax rates for the wealthy, which is what the Republicans want.

“Failure to reach an agreement will result in existing legislation taking effect, resulting in spending cuts and in tax hikes as the Bush tax cuts expire. These could easily push the US into recession.”