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Oil higher on Greek unity government plan

business Updated: Nov 07, 2011 11:06 IST
Greek debt crisis

Oil was higher in Asian trade on Monday on hopes that Greece's plans to form a unity government would resolve the country's debt woes, analysts said.

New York's main contract, light sweet crude for December delivery was 37 cents higher at $94.63 a barrel and Brent North Sea oil for December delivery advanced $1.11 to $113.08.

"We are seeing a positive turn in the oil markets," said Michael McCarthy, chief market strategist with Sydney-based stockbroking firm CMC Markets.

"To some extent, we are seeing cautious optimism that they (Greece) will elect a new leader tonight," he told AFP.

A new leader and cabinet to keep the country in the eurozone will be named on Monday after talks between outgoing prime minister George Papandreou and the conservative opposition chief Antonis Samaras, a government spokesman said.

A historic power-sharing deal was reached in dramatic late-night talks on Sunday after Papandreou crucially agreed to step down, removing a key stumbling block hours before jittery financial markets reopened with the euro in the line of fire.

However, markets were subdued on Monday as traders remained cautious that the Greek crisis was still far from over, while concerns about Italy's financial situation were rising.

The Greek accord came just ahead of a key eurozone finance ministers meeting on Monday to discuss whether to release an eight billion euro ($11 billion) slice of bailout cash that finance minister Evangelos Venizelos says is needed by December 15 to keep the country afloat.

Sunday's events capped a week that has been tumultuous even by the recent standards of Greece, which finds itself trapped in the eye of the eurozone debt storm.

The new government will be tasked with implementing the terms of an October EU bailout deal that calls for further harsh austerity measures on Greece, already at breaking point due to a shrinking economy and rapidly rising unemployment.