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Oil prices boosted by Greek bailout deal

Brent crude received $1 a barrel boost from a deal struck by Europe’s financial leaders to write off half of Greece’s debt and to boost the EU’s bailout fund.

Brent was trading at over $110/b in London on 27 October after EU leaders struck a deal with privately owned banks and investors to accept 50% losses on their Greek bond holdings. This will cut Greece’s debt to 120% of its GDP. Europe’s financial leaders also agreed to boost the eurozone’s bailout fund to €1 trillion ($1.4 trillion).

EU president Herman Van Rompuy said members of the eurozone and the IMF will give Greece another €100 billion ($140 billion).

US WTI prices, which have been rising steadily in recent weeks, also received a lift from the encouraging financial news from Europe, trading at just under $92/b – its highest level since early August.

The International Energy Agency (IEA) said Greece’s economy could be kick-started by reforming the country’s electricity and gas markets. The IEA claimed reducing the role of the state in Greece's energy sector could improve efficiency and boost the country's economic recovery by creating new jobs and reducing the market share of dominant energy firms.

The US department of energy (DOE), meanwhile, reported a 4.74 million barrel build in crude stocks for the week ending 21 October, far higher than the 1.5 million barrels expected by analysts.

US natural gas prices have made slight gains, despite continuing mild weather across the US. Henry Hub prices were trading at $3.58/’000 cubic feet (cf) in New York on 26 October. Gas stocks, meanwhile, were at 3.6 trillion cf for the week ending 14 October, according to the EIA, a 103 billion cf build on the previous week. Analysts expect a further 88 billion cf stockbuild to be announced by the DOE later today.

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