Oil prices rose above $94 a barrel Tuesday as the euro strengthened against the dollar on hopes that Greece will be able to avoid defaulting on its debts. By early afternoon in Europe, benchmark oil for July delivery was up $1.17 to $94.43 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 25 cents to settle at $93.26 on Monday. In London, Brent crude for August delivery was up 78 cents to $112.47 a barrel on the ICE Futures exchange. Greek Prime Minister George Papandreou faces a parliamentary vote of confidence late Tuesday, and then needs to get a new austerity package voted through parliament even as European officials discuss a second bailout for the country. While Greece's problems were not seen as directly affecting oil consumption, they influenced prices through exchange rate volatility. "The oil market will only see a major impact if the crisis spreads to larger countries in Europe," J.P. Morgan said in a report. "The main path through which Greece impacts oil in the short-term is via the euro/U.S. dollar exchange rate." Oil tends to rise when the dollar drops as a cheaper U.S. currency makes commodities such as crude cheaper for investors with other currencies. When the dollar gains, oil tends to fall. The euro rose to $1.4353 on Tuesday from $1.4309 late Monday. Less than two weeks ago, the Nymex contract was trading above $100, but concerns about deteriorating global demand for crude helped push prices lower. "Some market players clearly regard the lower price level after the sharp slump since mid last week as a buying opportunity," said analysts at Commerzbank in Frankfurt. A top energy industry expert warned higher fuel costs could undermine global economic growth. High crude prices could send the global economy back into recession, said Fatih Birol, chief economist at the International Energy Agency. "My worry is that current oil prices are a major risk of the global economic recovery," Birol said in a speech Tuesday in Singapore. "I'm very worried that we could see the same movie that we saw in 2008." Oil surged to $147 in July 2008, pinching consumer spending just as the global financial crisis undermined investor confidence. Crude traded at $33 by December of that year. On Monday, a second day of talks in Luxembourg between Greek and eurozone officials did not produce a final agreement on the next installment of rescue loans for Greece or on a broader, second bailout expected in cooperation with the International Monetary Fund. Markets are also awaiting the release of the latest figures for U.S. stockpiles of crude and refined products. Data for the week ending Oct. 1 is expected to show a draw of 2 million barrels in crude oil stocks and a rise of 1 million 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 — the market benchmark — will be out on Wednesday. In other Nymex trading in July contracts, heating oil rose 0.48 cent to $2.9368 a gallon while gasoline gained 1.9 cents to $2.9305 a gallon. Natural gas futures added 2.5 cents to $4.342 per 1,000 cubic feet.
