Oil prices were mixed in volatile Asian trading on Tuesday, with investors closely following developments in the eurozone following the controversial Cyprus bailout deal, analysts said. New York's main contract, light sweet crude for delivery in April, gained three cents to $93.77 a barrel in mid-morning Asian trade while Brent North Sea crude for May delivery dropped 18 cents to $109.33.
Brent prices were weighed down by concerns over the Cyprus deal, said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore. "Oil markets are likely to remain volatile for the next few days (with) investors monitoring for any spillover of the developments in Cyprus to other eurozone nations," he said in a market commentary.
Eurozone officials on Monday signalled that the shock levy of up to 9.9 percent on all bank deposits in Cyprus, part of an agreed bailout deal unveiled last weekend, could be modified to lessen the hit on small depositors. "The hint of flexibility by European policymakers settled a few nerves," said Jason Hughes, head of premium client management at IG Markets Singapore.
Eurozone finance ministers and the International Monetary Fund on Saturday agreed on a 10 billion-euro ($13 billion) bailout deal for Cyprus, the fifth eurozone member to be saved from bankruptcy. It is the first eurozone bailout plan in which private depositors are having to help foot the bill. The US benchmark oil prices recovered modestly in New York on Monday, with some analysts saying the Cypriot economy was not large enough to have a significant impact on the European and global economies.
"The market began to digest the fact that Cyprus is a very small part of the European economy," said Gene McGillian, a broker and analyst at Tradition Energy. Bill Baruch at iiTrader said the market said the measure was "concentrated" on Cyprus alone and would not be expanded to other countries in Europe, as some have feared.