Brent rises above $98 after OPEC meet; Greece eyed

Fri Jun 15, 2012 5:52am EDT
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By Manash Goswami

SINGAPORE (Reuters) - Brent futures climbed above $98 per barrel on Friday, extending gains on expectations Saudi Arabia would scale back supplies after the OPEC kept its output target unchanged, although uncertainty surrounding Europe's debt crisis capped gains.

The OPEC deal to retain the output limit at 30 million barrels a day implies a cut in supply of 1.6 million bpd. Oil also drew support from news that major central banks stood ready to take steps to stabilize financial markets if cliffhanger Greek elections on Sunday result in turmoil.

"That news is giving some comfort to the market that there will be coordinated action if it is required," said Ken Hasegawa, a commodity sales manager at Newedge Japan. "That is why we are seeing gains in prices today, but trading will be within a narrow range ahead of the Greek elections."

Brent crude had gained 86 cents to $98.03 a barrel by 0641 GMT. U.S. crude rose 82 cents to $84.73 a barrel, after settling $1.29 higher.

Brent is poised to fall 1.4 percent this week, declining for six out of the last seven sessions. The U.S. contract is set to rise 0.6 percent in its second straight week of gains, coming back from losses made in the previous five.

The European benchmark may trade in a wide range between $95 and $105 over the next few days and U.S. crude around $80 to $90 as investors assess the future of the euro zone and the broader impact it may have on the global economy, Hasegawa said.

Analysts at ANZ said in a report they expect the U.S. benchmark to trade in a range from $80 to $87 in the near term, with a downside bias for the contract to break below $80.

"That view, however, would be negated by a clear, pro-bailout victory in Greece, which we think could ignite a relief rally," the ANZ analysts said.   Continued...

A worker collects crude oil sample at an oil well operated by Venezuela's state oil company PDVSA in Morichal July 28, 2011. REUTERS/Carlos Garcia Rawlins