Oil prices climb amid weak demand outlook

LONDON - Agence France-Presse

REUTERS photo

Oil prices rose on Tuesday, while gains were capped by a weak demand outlook and eurozone worries, analysts said.
 
Brent North Sea crude for delivery in August gained 65 cents to $91.66 a barrel in London midday trade.
 
New York's main contract, light sweet crude for August, climbed seven cents to $79.28 a barrel.
 
"Oil prices have started to recover somewhat" after recent sharp falls, said Barclays Capital analyst Amrita Sen.
 
"Nonetheless, global oil demand in June is likely to have remained weak... due to increased uncertainty about the global macro backdrop." Eurozone fears hogged the spotlight ahead of an EU summit on Thursday and Friday, with traders doubtful that anything concrete would be agreed over how best to sort out the eurozone's mess, said Justin Harper, market strategist for IG Markets Singapore.
 
"With the downgrades of the Spanish banks and Cyprus... (traders were) feeling very cynical about the rhetoric," he told AFP.
 
He added that the EU so far had "very little direction" on a solution to the eurozone's debt woes, and were "firefighting and trying to contain the crisis rather than trying to move forward." European leaders attending the summit are under intense global pressure to head off a potentially catastrophic economic collapse, with particular attention on crises in Greece and Spain.

But their task came as ratings agency Moody's on Monday downgraded the credit ratings of 28 Spanish banks, saying they faced rising losses from commercial real estate loans.

The move came hours after Madrid formally requested a bailout of up to 100 billion euros ($125 billion) to help its banking sector.
 
And Cyprus, which had a large exposure to Greek government debt, requested financial help from its eurozone partners, following Ireland, Greece, Portugal and Spain.

While it did not specify the amount, local media speculated it would be in the region of five billion euros.