Oil above $91 as traders eye Greece austerity vote

June 28, 2011 - 9:30 AM

Oil prices rose above $91 a barrel Tuesday as investors prepared for a Greek parliamentary vote on a new austerity plan needed for the country to receive its rescue funds and avert a debt default.

The main vote is scheduled for Wednesday, but protests and strikes have hit the country already and the struggling government has only a slim majority.

By early afternoon in Europe, benchmark oil for August delivery was up 69 cents to $91.30 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell 55 cents to settle at $90.61 on Monday.

In London, Brent crude for August delivery was up $1.32 to $107.11 a barrel on the ICE Futures exchange.

Greek lawmakers will vote Wednesday and Thursday on a $40 billion austerity plan, government spending cuts that European officials say are a necessary condition to receive the next installment of Greece's $156 billion bailout loan from the European Union and the International Monetary Fund.

If Greece rejects the cuts, it could lead to a debt default and spread instability in other financially troubled European countries.

"Most observers expect the Greeks to understand just how much is at stake," energy consultant Cameron Hanover said in a report. "Contrarians argue that Greece's people may decide there is less pain in a default than in austerity."

Workers across Greece walked off the job Tuesday at the start of a 48-hour general strike while thousands of protesters held a rally outside Parliament, chanting anti-austerity slogans.

Weakness in the U.S. economy is also on the radar. The Commerce Department said Monday that U.S. consumer spending was unchanged in May, the worst result since September 2009. When adjusted for inflation, spending dropped slightly.

Markets are also awaiting the release of the latest figures for U.S. stockpiles of crude and refined products.

Data for the week ending June 24 is expected to show a draw of 1.7 million barrels in crude oil stocks and a rise of 700,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration โ€” the market benchmark โ€” will be out on Wednesday.

In other Nymex trading in July contracts, heating oil added 3.12 cents to $2.7961 a gallon while gasoline gained 3.39 cents at $2.8414 a gallon. Natural gas futures rose 2.5 cents to $4.281 per 1,000 cubic feet.

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Alex Kennedy in Singapore contributed to this report.