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Crude oil futures climb to 1-week high on Cyprus bailout deal

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Investing.com - Crude oil futures traded near a one-week high during European morning hours on Monday, as news that Cyprus and its international lenders reached a last-minute bailout deal boosted appetite for growth-linked assets.

On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD94.11 a barrel during European morning trade, up 0.4% on the day.

New York-traded oil prices rose by as much as 0.6% earlier in the session to hit a daily high of USD94.25 a barrel, the strongest level since March 19.

European finance ministers approved a EUR10 billion bailout plan for Cyprus just hours before a deadline, easing fears over a collapse of the island's banking sector.

The European Central Bank said last week that it will cut off liquidity to Cypriot banks on Monday if an agreement with the European Union and the International Monetary Fund on a bailout solution is not in place.

Under the bailout deal, the island's second largest bank, Laiki Bank, will be restructured and holders of bank deposits of more than EUR100,000 will be subject to significant losses.

Depositors holding less than EUR100,000 in their bank accounts will be protected from any deposit taxes.

A previous bailout proposal that included a levy on all deposits in Cypriot banks was rejected by the country's parliament last week, sparking fears the island could leave the euro zone.

Relief over the Cyprus deal prompted investors to shed safe haven assets, such as gold and the U.S. dollar, and move in to riskier assets like stocks and industrial commodities.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.15% to trade at 82.39.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Oil traders were looking ahead to a speech by Federal Reserve Chairman Ben Bernanke later in the trading day.

Last week, the U.S. central bank announced that it will leave monetary policy unchanged in spite of recent signs that the U.S. recovery is gaining traction.

The U.S. is the world's biggest oil consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery added 0.45% to trade at USD108.15 a barrel, with the spread between the Brent and crude contracts standing at USD14.04 a barrel.

The spread between the Brent and the crude contracts narrowed to USD13.73 a barrel on Friday, the smallest gap since early July.

Brent prices have been under pressure in recent weeks due to an improving production outlook in the North Sea and growing concerns over the euro zone's economic outlook.

At the same time, U.S. oil stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures, are declining as new pipelines relieve a supply glut there. Indications that the U.S. economy is improving has also lifted sentiment on the New York-benchmark.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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