Oil climbs on $900 billion European rescue plan

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Crude oil prices inched up Monday, as global investors welcomed the news that European Union leaders agreed on a $900 billion bailout plan for Greece.

What prices are doing: Crude for June delivery rose $1.69 or 2.25%, settling at $76.80 a barrel Monday.

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Click the chart for current prices.

Meanwhile, gasoline prices fell for the fourth day in a row, slipping to $2.908 a gallon from $2.914 the day before.

What's moving the market: The price of crude rose along with global markets Monday after the EU and the International Monetary Fund approved a $900 billion rescue plan for debt-strapped European countries. In a separate show of support, the U.S. Federal Reserve joined central banks in Canada and Europe to re-establish a program supporting credit markets.

The European Central Bank also announced overnight it will buy government and private bonds to rescue the euro.

The news boosted optimism in Europe, giving investors two incentives to buy oil. A recovering European economy could boost demand for fuel, and second, more euros circulating could make a tangible commodity a more attractive investment than paper currencies.

What analysts are saying: "What the ECB did when they announced they would buy back corporate and government bonds was the equivalent of giving the market a shot of heroin. It's going to make us feel good and euphoric for a while, but once the drugs start to wear off we have to be aware there could be the same problems," said Phil Flynn, a senior market analyst with PFG Best.

Looking ahead: Last week's volatility could carry into this week, Flynn said, and will continue as long as skepticism remains about a sustainable recovery in Europe.

Crude prices surged a week ago Monday after the International Monetary Fund committed to help Greece with emergency loans. Crude then fell the rest of the week as euro zone leaders met to hash out the details of the rest of the aid package, and violent protests broke out in Athens in opposition to tough austerity measures.

"The market is growing more skeptical about the situation," Flynn said. To top of page

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