Brent oil trading firmer near $109 as Greece situation stirs markets

Brent oil futures open today’s trading session firm at $109 a barrel after stock markets fell on Tuesday following Greece’s call for a referendum on its debt bailout, which revived concerns about the latest EU bailout package and EU country defaults.

Latest Brent Oil Price

In London, Brent crude oil futures for December 2011 delivery was trading at $109.37 a barrel, 06.50 GMT this morning on the ICE Futures Exchange.

The ICE Brent December contract fell only 27 cents to settle at $109.36 a barrel after having slumped as low as $106.10 in trading yesterday.

Markets Heading Lower

Most Asian stock markets fell today, as Greece’s plan to hold a referendum on its newly crafted bailout package rattled investors, sending the Tokyo market to a three week low, denting both Brent and WTI oil prices.

The Great Greek Referendum

“Greece’s referendum plan has introduced a new level of uncertainty over the EU debt crisis. And you have worries about a weakening China, a really heavy consumer of commodities.” said Nader Naeimi, a strategist at AMP Capital Investors, Sydney.

“News of a proposed Greek referendum on whether or not to accept the bailout package has completely come from left field and has traders flabbergasted.” said Tim Waterer, senior foreign exchange dealer with CMC Markets, Sydney.

“Markets are seriously pondering a disorderly default in Greece…Risk assets remain a sell on rallies against the background of prolonged European uncertainty.” said Crédit Agricole strategist Mitul Kotecha.

Stock markets fell broadly in Asia as worries about a Greek default escalated after Prime Minister George Papandreou’s call threw the Greek government into turmoil, with Greek news outlets reported early Wednesday that Mr. Papandreou had won unanimous support from his cabinet over his call for the referendum.

However, several lawmakers in the governing Socialist Party rejected the prime minister’s plan, raising the possibility that he will not survive a no-confidence vote scheduled for Friday.

But Greek ministers this morning voted unanimously for a referendum on the bailout deal “as soon as possible”, backing the proposal made by prime minister George Papandreou as he fought to save his own skin.

This would be an effective vote on whether or not Greece should remain in the straitjacket of the single currency and accept years of spending cuts and tax rises, or simply refuse to pay what it owes and crash out of the euro.

The move that has horrified other European leaders, with France and Germany meeting Greek officials in Cannes for crisis talks today, ahead of a G20 summit on which the European economy now appears to hinge.