| GEO Business | | Oil jumps towards $77 on EU emergency fund approval | Updated at: 0812 PST, Monday, May 10, 2010
 TOKYO: Oil prices rebounded above $76 on Monday from the lowest in almost three months after the European Union agreed to protect the bloc's debt-stricken nations, boosting confidence energy demand will continue to recover.
Ministers agreed to set up a 500 billion-euro ($670 billion) fund in the early hours of Monday, after the IMF unanimously approved a 30 billion euro ($40 billion) rescue loan for Greece a day earlier to stem a crisis that threatens other euro zone members.
U.S. crude for June delivery rose $1.59 to $76.70 a barrel at 0142 GMT. ICE Brent crude for June climbed $1.48 to $79.75.
"It will take some time for events in Europe to play out and uncertainty will remain in investors' minds going forward, but the announcement of these packages allays some concerns because contagion can be contained in the short term," said Ben Westmore, a commodities analyst at National Australia Bank.
Crude prices fell more than $11 or about 13 percent last week, the biggest weekly loss in almost a year and a half, on worries that the euro zone's debt crisis would derail the global economic recovery. Prices touched $87.15 a week ago, the highest level in almost 19 months, before ending the week at their lowest since mid-February.
"Oil probably sold off a bit too fast because you had a lot of panic, but with the demand recovery in emerging Asia you could see price returning to around $80," Westomore said.
The front-month contract had dropped $2 on Friday, rattled by investor concerns about debt-stricken Greece's ability to avoid default.
The dollar fell about 0.6 percent against a basket of currencies .DXY on Monday after the euro bounced off 14 months lows in the previous session and S&P futures climbed, anticipating a relief package from the EU that would calm markets shaken by the European debt crisis.
"A stronger dollar was causing downward pressure on oil prices, together with the uncertainties about the global economic recovery," Westmore said.
A weaker dollar renders oil imports cheaper for emerging economies, which account for most of the growth in demand forecast for this year.
The latest EU deal consists of a mixture of loans and loan guarantees totaling 440 billion euros, and 60 billion euros through a European instrument that will be covered with EU guarantees.
The emergency package will involve the participation of the IMF. Officials said the IMF's contribution could be about 220 billion euros.
News of the EU emergency fund also lifted Asian stocks, sending Japan's Nikkei average 0.9 percent higher on Monday.
Saudi Arabia, the world's top crude oil exporter, will maintain full volumes to its main Asian customers next month, suggesting it is content with current oil prices.
State oil firm Saudi Aramco informed at least four term buyers in Asia over the weekend that it will supply full contracted volumes of crude oil in June, steady from May levels, industry sources said on Monday. |  |
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