Brent Steady Above $108 As Relief From Cyprus Deal Fades
Brent crude oil traded steadily at $108.12 at 7:12 GMT on Tuesday morning after the Cyprus bailout deal averted an immediate financial crisis, but caused uncertainty about its potential to set a precedent for future banking restructures.
The last minute agreement between Cypriot officials and the EU involves a large scale reorganization of Cyprus' banks in exchange for a 13 billion euro rescue fund.
The conditions stipulate that the nation's second largest bank will be closed and accounts worth less than 100,000 euros will be moved to another bank. Uninsured deposits of 100,000 euros or more will face losses of up to 40 percent of their total value.
Head of the Eurogroup and Dutch Finance Minister Jeroen Dijsselbloem made comments that implied that Cyprus' bailout could be used as a new template for future banking problems. His statements were not well received, as most expected capital flight from struggling southern European nations where account holders do not want to shoulder the debt burden.
Investors will be watching for Cypriot banks to reopen on Thursday under strict capital controls that will keep account holders from withdrawing all of their money. The tiny island nation's new restrictions have angered Cypriots who have been lining up at ATMs to withdraw money over the past week as the nation's banks remained closed for an extended bank holiday.
Brent prices also faced pressure after CNBC reported that Saudi Arabian oil minister Ali al-Nami said oil prices of $100 a barrel would be reasonable for both consumers and producers.
Moving forward, most will be watching for US oil inventory information, due out later in the day.
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