Brent crude climbs over $114 on euro zone hopes
(Reuters) - Brent crude oil jumped more than $2 per barrel to more than an seven-week high on Monday on hopes Greece and Italy could resolve their debt crises and minimize the chances of a further slowdown in global economic growth.
Brent futures for December rose $2.91 to a high of $114.88, their highest since mid-September, before easing back to trade around $114.50 by 1440 GMT. Brent settled $1.14 higher on Friday, rising for a second week.
U.S. December crude oil futures rose $1.20 to $95.46 a barrel. The contract rose 1 percent last week, posting a fifth straight weekly gain.
The market rose through early European trade and took another step higher as U.S. traders came into the market, brokers said.
"We started strong today, then there was a slight fall in prices, and now we see a positive spin with news on Greece and Italy," said Robert Montefusco, a senior broker at Sucden Financial Ltd.
Italy, with debts amounting to 120 percent of gross domestic product, has the biggest government bond market in the euro zone. An Italian financial collapse would pose a huge risk to markets but might bring an administration that would be better able to handle the debt crisis, some investors say.
Italian Prime Minister Silvio Berlusconi on Monday denied reports he was about to resign.
In Greece, political change is also on the agenda as leaders set to choose who will lead a new coalition and push through a bailout before the country runs out of money in mid-December.
The dollar and gold rose on Monday as investors looked for safe havens, while many stock markets, base metals and other risky assets fell. The MSCI world equity index .MIWD00000PUS shed 0.7 percent and the FTSEurofirst finance/markets/index?symbol=gb%21FTPP">.FTEU3 fell 0.5 percent.
"Economic news around Italy and Greece is dominating the market," said Christophe Barret, global oil analyst at Credit Agricole.
Prime Minister George Papandreou and opposition leader Antonis Samaras agreed to form a new coalition government, but details of a deal to resolve Greece's debt crisis remained sketchy, while the country was due to run out of money in a few weeks.
The European Union told Greek leaders to explain by Monday evening how they would form a government to get 130 billion euros ($180 billion) in emergency funding.
ITALY
Market attention, meanwhile, shifted to Italy as its government bond yields hit their highest levels since 1997 and political turmoil threatened to drag the economy deeper into crisis.
Italy faces a vote on public finance in parliament on Tuesday, and the center-left opposition said it was preparing a motion of no-confidence that would bring Berlusconi down even if he should survive Tuesday's vote.
Seasonal factors offered some support to oil.
Low fuel inventories in the world's top oil consumer, the United States, amid signs of an earlier-than-usual onset of winter may prompt refiners to ramp up output. That may further squeeze an already tight crude market coping with disruption in supplies from Libya and the North Sea.
Investors watched the unfolding bankruptcy of MF Global (MFGLQ.PK). CME Group (CME.O) and IntercontinentalExchange Inc (ICE.N) moved over the weekend to limit the fallout from the bankruptcy filing on futures markets by lowering margin requirements on some accounts.
The CME said on Monday it asked brokers who have taken over customer accounts from MF Global, which filed for bankruptcy protection on October 31, to not disburse any of the money until the close of business on Tuesday as it looks to verify the amounts involved.