Oil Prices Rise on Weak Dollar

The Street, Andrea Tse

Oil futures were trading higher on the back of a weaker dollar.

Texas light sweet crude oil for August delivery was higher by $0.47 to $94.10 as the U.S. dollar slid. The August Brent crude oil contract, earlier trading in positive territory, was down $0.21 to $111.48 thanks to some weak European economic data.

The U.S. dollar stayed at around the $74.75 level, down 0.3%, as the euro—the second-most traded currency—gained against its U.S. counterpart on confidence that Greek Prime Minister George Papandreou and his government will survive a parliamentary vote of confidence.

A vote of confidence is viewed as critical to keeping the euro zone on track in its attempt to prevent a Greek debt default and contain European debt contagion risks.

On Monday, European finance ministers unexpectedly postponed the next 12 billion euro round of financial aid to debt-laden Greece, pending a guarantee from the government that it will implement stronger austerity measures, despite the public outcry over such measures.

The International Monetary Fund (IMF) insists that it will not provide Greece with desperately needed funding until the European Union promises more funding in the coming year.

"There is. . .no doubt that a negative outcome of the confidence vote today is likely to send shock waves through financial markets, while the more expected positive outcome would boost sentiment," said Filip Petersson, SEB Commodity Research strategist. "However, this would by no means be the end of the Greek crisis."

Factoring in a positive outcome on the vote and strong crude oil market fundamentals, the SEB Commodity Research team takes a neutral to bullish view of the crude oil market Tuesday.

"The situation is however very tense and we could see bursts of volatility today," said Petersson.