Brent oil trading near $114, US dollar comes back into play

Brent oil futures open today’s trading session back around $114 a barrel as oil prices continue to remain volatile and strength in the US dollar could well hold oil prices from rising back to 2011 highs, in the short term at least.

Latest Brent Oil Price

In London, Brent crude oil futures for June 2011 delivery was trading at $114.69 a barrel, 08.30 GMT this morning on the ICE Futures Exchange.

Greece Concerns and the Euro / US Dollar

Concerns over a possible second bailout package for Greece lowered the euro 0.5 percent to $1.4284 against the US dollar, while ratings agency Standard & Poor’s cut Greece’s rating again, dragging the country further into junk status territory.

Once again, the financial situation in Greece will see some investors selling out on the euro and the US dollar will again be one possible winner. A stronger US dollar makes oil prices more expensive for buyers using other currencies.

“In the short-term, there could be more unwinding of euro/dollar long positions due to negative news on fringe euro zone countries’ debt problems.” said Junya Tanase, currency strategist at JP Morgan, Tokyo.

But some analysts said the euro was unlikely to fall as sharply as it did a year ago when the Greek debt crisis hit financial markets, because there was now a safety net for indebted countries.

“Last year there was an imminent threat that Greece could default. But now, even though people are talking about the possibility that some countries could default in the future, there are no worries about immediate defaults.” said JPMorgan’s Tanase.

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Brent oil trading near $114, US dollar comes back into play