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Oil Prices May Rise on Optimism Over Greece Debt Deal: Survey

Oil Rig
Oil Rig

Benchmark crude oil prices will likely rise this week as risk appetite improves on optimism that Greece and private sector creditors are nearing a deal on a debt swap, CNBC's weekly survey showed.

Exactly half, or fifty percent of this week's sample group, or five out of ten respondents, expect oil prices to climb this week while one forecast a pullback. But the bulls have a narrow majority with the remaining four respondents expecting prices to remain stuck in a range.

The Federal Reserve's pledge to keep interest rates at a record low of zero to 0.25 percent until late 2014 boosted risk appetite across the commodities market, and helped drive a $1.10 a barrel gain in U.S. crude futures this week. March delivery crude futures settled at $99.56 a barrel on the New York Mercantile Exchange. Brent crude oil for March settlement gained $1.60, or 1.5 percent, last week to $111.46 a barrel on the ICE Futures Europe exchange in London.

An escalation in the rhetoric from Iran as Western sanctions against the OPEC producer supported prices this week as Tehran repeated threats to close the strategically and economically-vital Strait of Hormuz, a transit route for a fifth of the world's sea-borne crude oil.

Tom Weber, Managing Director at PFGBest has a "neutral to bearish" view on oil this week and maintains his strategy of shorting any rally to the upside. "While the U.S. data seems to be improving, the Fed has signaled that all is not well. Whereas, commodities would rally just on the mention of a QE event 'in the old days', the market is now saying 'Show me the Money!'"

However, Shelley Goldberg, Director, Global Resources & Commodities Strategy, at Roubini Global Economics warned "a shock to oil supply would have devastating ramifications for the global economy, resulting in deep recession if not, depression. A pick up in riskier assets is a positive for oil, while holding a short position in crude has become a high risk proposition."

From a global political perspective, Goldberg said 2012 would mark an unraveling of ties between nations and deteriorating global alliances. "Uncertainty is also growing in a year when the U.S., China and Russia all face elections, similar to a low scoring sports event, when tensions build in anticipation of a final outcome," she said.

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