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Oil edges up above $80 in Europe as markets wait for developments in EU debt crisis response
Oil prices rebounded slightly to above $80 a barrel Monday as markets awaited Europe's next moves to tackle a prolonged debt crisis that threatens to drag the continent into recession.
By early afternoon in Europe, benchmark oil for November delivery was up 64 cents to $80.49 in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract fell as low as $77.11, while on Friday Nymex crude fell 66 cents to finish at $79.85 a barrel.
In London, Brent crude for November delivery was up 97 cents at $104.94 on the ICE Futures exchange.
U.S. Treasury Secretary Timothy Geithner told his European colleagues Saturday at the annual meeting of the International Monetary Fund that Europe's governments must join with the European Central Bank to solve Greece's debt crisis once and for all.
Greece is at risk of defaulting on its massive debts if it doesn't meet austerity targets that are a requirement of receiving the next tranche of loans in an international bailout. An uncontrolled default would ricochet through the financial system as European banks are big holders of Greek government debt.
The IMF, which sets policy for the 187-nation financial institution, ended its discussions Saturday with a pledge to work decisively and in a coordinated way to deal with Europe's massive debts. The IMF pledge was similar to one made Thursday by the finance ministers of the Group of 20 major economies.
The talk appeared to calm stock and commodity markets. European indexes and U.S. futures were higher in early trading Monday. But Asian stocks fell sharply.
"Markets are in the process of discounting a future European 'package,' whatever shape that ultimately will take," said Edward Meir of MF Global in New York. "As a result, we could see a modest rebound set in this week, but this very much depends on investors getting a sense that progress is being made as opposed to politicians retreating into their respective corners and sticking their heads in the sand."
"Needless to say, the tone remains very tenuous, as these are very critical days and weeks ahead," Meir added.
In other Nymex trading for November contracts, heating oil rose 2.82 cents to $2.8341 per gallon and gasoline futures gained 3.02 cents to $2.5546 per gallon. Natural gas for November delivery advanced 1.8 cents to $3.719 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.