Oil above $98 as Greece, Italy change leaders

SINGAPORE—Oil prices rose to a three-month high above $98 a barrel Friday in Asia amid hopes that political leadership changes this week in Greece and Italy will help Europe contain its debt crisis.

Benchmark crude for December delivery was up 29 cents at $98.07 a barrel, the highest since late July, at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.04 to settle at $97.78 in New York on Thursday.

Brent crude was down 15 cents to $113.56 a barrel on the ICE Futures Exchange in London.

Greece and Italy have turned to economists to lead them out of their debt crises. Greece chose Lucas Papademos as prime minister. In Italy, Mario Monti received increasing support to replace outgoing Prime Minister Silvio Berlusconi.
Crude has soared about 30 percent from $75 on Oct. 4 on optimism Europe will be able to at least temporarily keep its debt problems from sparking a global financial crisis.

Falling crude inventories in the U.S. and Europe have also helped boost prices.

“Oil markets remain extremely tight,” Barclays Capital said in a report. “Without those macro concerns, in our view oil prices would have already set new all-time highs.”

Crude jumped to a record $147 in 2008.

Oil traders are also closely watching reactions to Iran’s nuclear power program. An attack against Iran, OPEC’s second-largest crude producer, would likely send prices sharply higher.

“The risk of an upside spike is being compounded by the return of Iran to the fore as an issue,” Barclays said. “The current geopolitical background is one in which the triggers for a sharp push above $200 per barrel on the basis of a geopolitical shock are starting to appear less than extreme.”

In other Nymex trading, heating oil added 0.6 cent to $3.16 per gallon and gasoline futures gained 1.1 cents to $2.65 per gallon. Natural gas rose 0.3 cent at $3.65 per 1,000 cubic feet.