Oil near US $93 a barrel as Cyprus uncertainty keeps energy markets on edge

The price of oil inched closer to US$93 a barrel Friday after a big slide the day before as the financial crisis in Cyprus kept traders on edge.

By early afternoon in Europe, benchmark West Texas Intermediate crude for May delivery was up 35 cents to US$92.81 a barrel in electronic trading on the New York Mercantile Exchange. The contract shed one per cent on Thursday, falling $1.05 to finish at US$92.45.

Brent crude, used to price many kinds of oil imported by U.S. refineries, was up 11 cents to US$107.50 a barrel on the ICE Futures exchange in London.

The European Central Bank has threatened to end emergency support of Cyprus’s banks next week unless leaders there can secure more funding.

“Crude oil prices rebounded from earlier losses and corrected higher on Friday on a fairly volatile trading session as uncertainty in Cyprus continues to weigh on market sentiment,” said a report from Sucden Financial Research in London.

The report added that Sucden expected oil prices to remain within their recent range, “while any surprises from Cyprus could give some momentum to the market.”

Cyprus must raise about 5.8 billion euros (US$7.5 billion) by Monday to avoid bankruptcy. Several plans have failed, including a proposal to tax deposits.

If the Mediterranean country is unable to secure a bailout of 10 billion euros (US$13 billion) above its own efforts, its banks will likely fail and it could be forced to leave the euro currency.

Cypriot lawmakers were set to vote Friday on a new set of revenue measures meant to secure the bailout, while attempts to clinch aid from Russia appeared to have failed. Russian depositors have around 20 billion euros in the country.

In other energy futures trading on the Lyme, wholesale gasoline fell 0.18 cent to US$3.055 a U.S. gallon (3.79 litres), heating oil lost 0.45 cent to US$2.974 a gallon and natural gas rose 5.8 cents to $3.989 per 1,000 cubic feet.