By Christian Schmollinger and Ben Sharples
(Bloomberg) – Crude oil traded near $74 a barrel as the euro held close to a nine-month low against the dollar after European leaders refused to detail how they would rescue Greece should it fail to finance its debt.
Greece will report to the European Commission on March 16 on its efforts to cut the EU’s biggest budget deficit this year. A stronger dollar curbs demand for commodities as an alternative investment. Japanese refiner Showa Shell Sekiyu K.K. is considering a restructuring that may shut 20 percent of its capacity, according to reports from broadcaster NHK.
“Everything points to a bearish picture right now,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “I’m bearish because of the debt issues in the EU. The dollar is getting bit stronger, especially against the euro. The fundamentals still don’t look good.”
Crude oil for March delivery was at $74.23 a barrel, up 10 cents in electronic trading on the New York Mercantile Exchange at 12:35 p.m. Singapore time. The number of front-month contracts traded yesterday and by 12:33 p.m. Singapore time today totaled 20,854, compared with the five-year daily average of 326,000.
The U.S. was shut yesterday for Presidents’ Day, while markets in China, Hong Kong, Singapore and Malaysia are closed for the Lunar New Year holiday.
There was no floor trading in New York yesterday because of the U.S. holiday. Electronic trading ended at 1:15 p.m. in New York with no settlement of prices. Yesterday’s electronic trades and today’s session will count toward the settlement.

Stronger Dollar

“Markets are waiting to see what happens with the outcome of the European Commission meeting and the details of any sort of bailout plan,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “There is a raft of Asian markets closed. With the volumes going through, there doesn’t look like a lot of activity.”
The euro, which has weakened 5 percent against the dollar since the start of 2010, partly because of concerns over the euro zone’s stability, fell for a fourth day yesterday. The dollar traded at $1.3625 per euro at 12:26 p.m. in Singapore, from $1.3598 yesterday. Greece is pledging to cut its debt by 4 percentage points of gross domestic product this year.
“These sovereign debt concerns are really weighing on sentiment around Europe,” Westmore said. “There is more likely to be moderation than there is to be an increase in oil prices,” he said.

Refinery Closure

Tokyo-based Showa Shell will scrap the 120,000 barrel-a-day Keihin plant near Tokyo to counter falling demand as more fuel- efficient and hybrid cars take to the roads, NHK reported. Showa Shell said in a statement to the stock exchange it wouldn’t confirm or deny the report.
Japanese refiners Nippon Oil Corp., Nippon Mining Holdings Corp. and Cosmo Oil Co. have announced planned refinery closures in the last two years amounting to 680,000 barrels a day of capacity as domestic fuel use declines because of energy conservation and a shrinking population.
Japan, the world’s third-largest oil consumer, will see crude consumption fall 4.1 percent in 2010, according to forecasts from the International Energy Agency.
Brent crude for April delivery was at $72.84 a barrel, up 35 cents, on the ICE Futures Europe exchange in London at 12:33 p.m. Singapore time. The contract fell 39 cents, or 0.5 percent, to settle at $72.51 a barrel yesterday.

–With reporting by Shigeru Sato and Yuji Okada in Tokyo. Editors: John Viljoen, John Chacko.

To contact the reporters on this story: Ben Sharples in Canberra at +61-2-9777-8683 or bsharples@bloomberg.net; Christian Schmollinger in Singapore at +65-6212-1898 or Christian.s@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at +65-6311-2423 or crussell7@bloomberg.net

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