Oil rallies in Asia as eurozone debt concerns ease

SINGAPORE—Crude prices soared in Asia Monday on reports that the IMF could bail out Italy as European giants France and Germany explored more radical measures to shore up the eurozone, analysts said.

New York’s main contract, light sweet crude for delivery in January, gained $1.52 to $98.29 per barrel in the afternoon.

Brent North Sea crude for January delivery rose $1.26 to $107.66.

Reports that the International Monetary Fund (IMF) was considering a 600 billion euro ($800 billion) bailout for Italy “could be one of the factors” behind the crude rally, said Ker Chung Yang, commodity analyst for Phillip Futures in Singapore.

Italian newspaper La Stampa reported on Sunday that the fund was considering the bailout to allow Prime Minister Mario Monti a 12- to 18-month lifeline to implement urgent budget cuts and growth-boosting reforms in the heavily indebted country.

Oil was also reacting to news that Germany and France had over the weekend looked at ways to deepen and hasten fiscal integration across the eurozone to defend the region against its debt crisis, Ker added.

“I think we can see that crude oil prices have been rising on optimism after Germany and France discussed more radical measures… in finding a solution to the eurozone debt crisis,” he told AFP.

The two European giants on Sunday discussed methods of imposing tighter budget controls over eurozone nations via a zonal agreement or a separate compact outside of the European Union treaty involving around eight to 10 nations, news reports quoted EU sources as saying.