Oil prices rebounded above $77 on Monday from their lowest in almost three months after the European Union agreed to protect the bloc's debt-stricken nations, boosting confidence energy demand will continue to recover.Ministers agreed to set up a 500-billion-euro ($670 billion) emergency fund in the early hours of Monday, after the IMF unanimously approved a 30 billion euro ($40 billion) rescue loan for debt-stricken Greece a day earlier to stem a crisis that threatens other euro zone members.U.S. crude for June delivery was up $2.06 at $77.17 a barrel by 0459 GMT. ICE Brent crude for June climbed $1.92 to $80.19."It will take some time for events in Europe to play out and uncertainty will remain in investors' minds going forward, but the announcement of these packages allays some concerns because contagion can be contained in the short term," said Ben Westmore, a commodities analyst at National Australia Bank.Crude prices fell more than $11 or about 13 percent last week, the biggest weekly loss in almost a year and a half, on worries the euro zone's debt crisis would derail the global economic recovery. Prices touched $87.15 a week ago, their highest in almost 19 months, before ending the week at their lowest since mid-February."The market got ahead of itself and this was probably a much needed reality check to get the heat out of the market," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp."The EU has gone a long way to restore confidence in the eurozone. We may get people coming in and saying it is still a daunting task, asking who is going to foot the bill. But at least it has stopped the freefall."The front-month contract had dropped $2 on Friday, rattled by investor concerns about Greece's ability to avoid default.For a graph of front-month crude contract volatility, click http://graphics.thomsonreuters.com/gfx/MBU_20101005114720.jpg"Oil probably sold off a bit too fast because you had a lot of panic, but with the demand recovery in emerging Asia you could see price returning to around $80," Westmore said.OVERSUPPLIED MARKETOPEC's secretary-general said on Sunday global oil markets were oversupplied, but it was too early to talk about the producer group taking action to halt the sharp price fall sparked by the euro zone debt crisis."We have a lot of crude oil on land and offshore," Secretary General Abdullah al-Badri told reporters in Doha."OPEC is overproducing, there is no doubt about it," he added, urging greater compliance from OPEC producers with deep curbs in production agreed in 2008.The dollar fell more than 1 percent against a basket of currencies on Monday. A weaker dollar makes oil imports cheaper for emerging economies, which account for most of the growth in demand forecast for this year."A stronger dollar was causing downward pressure on oil prices, together with the uncertainties about the global economic recovery," Westmore said.The latest EU deal is a mix of loans and loan guarantees totalling 440 billion euros, and 60 billion euros through a European instrument to be covered with EU guarantees.The emergency package will involve the IMF, with officials saying its contribution could be about 220 billion euros.Price charts show U.S. crude temporarily supported at $74.51 and expected to rebound to $78 as the drop last week was too sharp not to be followed by a good rebound."Technicallly, we had so much damage to the charts in one week that we may see prices consolidate at this level, after falling through so many support levels," Mitsubishi's Nunan said. "It's going to have a hard time clearing above $80."News of the EU emergency fund also lifted Asian stocks, sending Japan's Nikkei average 1.6 percent higher on Monday.Saudi Arabia, the world's top crude oil exporter, will maintain full volumes to main Asian customers next month, suggesting it is content with current oil prices.China's main ports received 18.46 million tonnes of crude oil in the first 29 days of April, up 26.6 percent on the year, the transportation ministry said on its website.The increase signalled the world's second-largest crude buyer's total inbound shipments could have topped 20 million tonnes last month as imports via several land entrances were not included in the statistics.(For more business news on Reuters Money visit http://www.reutersmoney.in)News posted by www.newsinfoline.com
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