Oil extends gains on Euro zone rescue pack

By @ibtimes on

SINGAPORE (Commodity Online) : World oil prices extended gains in Asian trade Tuesday mainly after policy makers agreed on a trillion dollar emergency package to help Euro zone coming out of debt crisis.

Light sweet crud for June delivery was seen trading at $77.11 a barrel at 11.00 a.m Singapore time while Brent crude was at $80.35 a barrel at the same time.

The European Union over the weekend crafted the biggest rescue package in recent times, sending stock markets soaring around the world on Monday.

The Euro zone package consists of 440 billion euros in guarantees from euro area states, plus 60 billion euros in a European stabilisation fund and another 250 billion euros from the International Monetary Fund.

The size of the aid package surprised market participants and boosted confidence that oil demand growth will continue.

OPEC Secretary-General Abdullah al-Badri said he expected the rescue package to boost oil prices back above $80 a barrel, but warned of wild price swings as the global economy continued on its path to recovery.

On Monday, June delivery rose $1.69 to settle at $76.80 on the New York Mercantile Exchange. It hit a day high of $78.51 in earlier trading. London's Brent North Sea crude for June soared $1.85 to settle at $80.12 a barrel.

Crude prices are down from an 18-month high of $87.15 a barrel early last week as the debt crisis battered the euro, which rallied Monday to $1.2995 from $1.2759, before drifting back to $1.2825 in morning New York trading.

American Petroleum Institute will release its inventory report for the week to May 7 later Tuesday and the U.S. EIA report will be available Wednesday.

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