US Oil gains on hopes Cyprus impact limited

US oil prices rose modestly Monday on hopes that the controversy over a bank depositor tax included in the EU-IMF rescue of Cyprus may have limited impact on the broader economy.

The US benchmark, West Texas Intermediate crude for April delivery, gained 29 cents to settle at $93.74 a barrel on the New York Mercantile Exchange.

In London, Brent North Sea for May settled at $109.51, down 31 cents.

Crude oil prices spent much of the morning in negative territory as news of the Cyprus bailout plan filtered through the market.

Eurozone finance ministers and the International Monetary Fund on Saturday agreed on a 10 billion-euro ($13-billion) bailout, but under the deal, depositors in Cyprus banks could be hit with as much as a 9.9 percent one-time tax to help boost government coffers.

Oil and other financial markets moved sharply lower on fears that the controversy over the tax could spur another flareup in the eurozone.

However, oil prices rebounded as EU officials signaled the tax could be modified to lessen the hit on small depositors, and as analysts concluded that Cyprus is not large enough to have a significant impact 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 wouldn't be expanded to other countries in Europe, as some have feared.

Carl Larry, a broker at Atlas Commodities LLC, said the US oil benchmark outperformed the European oil benchmark because of the superior outlook for the US economy.

"We have a good outlook here in the US for oil demand," Larry said.