Oil prices bounced from 2012 lows today thanks to support from better than expected German economic data. The euro zone avoided a double-dip recession as the monetary union's largest economy grew 0.5 percent in the first quarter from the final three months of 2011.
The euro zone GDP stagnated in the first quarter, while expectations were for a 0.2 percent contraction following a 0.3 percent in the final quarter of 2011.
However, the ZEW institute’s German business sentiment index disappointed. The gauge dipped to 10.8 this month from 23.4 in April, reflecting the impact of the political uncertainty in Europe.
Greece is now set to hold a new election after a last ditch attempt to form a government by president Karolos Papoulias failed.
The five parties that participated in coalition talks did not come to an agreement despite warnings from Papoulias that the debt laden country’s banking system could collapse as a result of further uncertainty.
It has been reported that the anti-bailout Coalition of the Radical Left, also known as Syriza, has gained support over the past week and could win a new election, which could lead to Greece’s exit from the euro zone and put the future of Europe’s single currency in jeopardy.
Apart from the situation in Europe, demand for oil futures was hit by expectations of another increase in oil supplies in the US.
Analysts polled by Bloomberg projected tomorrow’s official data to show an increase of 1.5 million barrels in America’s crude stocks to 381 million, the highest level in more than two decades.
US light, sweet crude for June delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rose 17 cents to US$94.95/barrel in morning trade in New York.
June Brent crude rallied 76 cents to US$112.33/barrel on the ICE Exchange this afternoon.
Today’s top risers in the oil and gas sector were:
Forum Energy (LON:FEP), up 15 percent at 141 pence at midday
Chariot Oil & Gas (LON:CHAR), up 11 percent at 83.14 pence
Matra Petroleum (LON:MTA), up 10 percent at 2.59 pence
JKX Oil & Gas (LON:JKX), up 5.5 percent at 119.75 pence
Kea Petroleum (LON:KEA), up 5.5 percent at 9.75 pence
The top fallers were:
Bankers Petroleum (LON:BNK), down 18.5 percent at 138.75 pence
Enegi Oil (LON:ENEG), down 11 percent at 14.82 pence
Frontera Resources (LON:FRR), down 9.5 percent at 0.43 pence
Volga Gas (LON:VGAS), down 8.5 percent at 77 pence
Nostra Terra Oil & Gas (LON:NTOG), down 7.5 percent at 0.56 pence