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Oil prices climb on Cyprus bailout deal

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(Globalpost/GlobalPost)

Oil prices gained on Monday, sparked by a rescue deal for the crisis in Cyprus, which had threatened to spill over and further harm the weak eurozone economy.

The New York benchmark, West Texas Intermediate for May delivery, finished up $1.10 to $94.81 a barrel.

Brent North Sea crude for May delivery gained 51 cents to end at $108.17.

The jump in crude prices followed a nervous weekend as Cyprus, the European Union and the International Monetary Fund cobbled together a last-minute, 10 billion euro ($13 billion) rescue that averted a collapse of the island country's banking system.

The tough conditions and Cyprus's ability to contain a run on the banks still had markets nervous, so the gains were well off their peaks for the day.

"Crude prices are rallying on the positive tone set by this latest avoidance of default within Europe, despite the bailout not boding well for Cyprus," said Matt Smith, an energy expert at Schneider Electric.

"The potential detrimental ramifications to oil demand, should the contagion have spread to one of the largest economies of Italy or Spain, had the crude complex on tenterhooks."

Elsewhere, the oil minister of export giant Saudi Arabia said that crude priced around $100 a barrel was "reasonable."

"In 1997, I thought $20 was reasonable. In 2006, I thought $27 was reasonable," Saudi Oil Minister Ali al-Naimi told reporters Monday in Kuwait City on the sidelines of a Gulf oil conference.

"Now, it is around $100 ... and I say again: 'It is reasonable'" -- despite some market observers noting that current energy prices are putting a strain on the global economic recovery.

Kuwait's Oil Minister Hani Hussein called current prices "fair."

"There is a little bit of over-supply but we think that the market is stable at the moment," he said.

"We are generally happy with the oil prices at the moment ... We think that the prices now reflect the market (situation) in general."

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http://www.globalpost.com/dispatch/news/afp/130325/oil-prices-climb-cyprus-bailout-deal-0