The price of oil inched up closer to $88 a barrel Tuesday as investors were encouraged by robust retail sales in the U.S. ahead of the Christmas holiday and a deal in Europe to give Greece a new batch of bailout funds.
By early afternoon in Europe, benchmark oil for January delivery was up 18 cents to $87.92 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 54 cents to close at $87.74 a barrel on the Nymex on Monday.
Holiday shopping in the U.S. got off to a brisk start over the four-day Thanksgiving weekend — spending over the four-day weekend totaled $59.1 billion, up 12.8 percent from 2011.
Carl Larry of Oil Outlooks and Opinions said all that gift-buying bodes well for energy demand, which in turn pushes up prices.
"All of these goods being purchased start out at point A and eventually have to get to point B. That means more cargo jets, more trucks delivering good to stores and more consumers driving to get to them," Larry said in a market commentary.
Traders were also relieved that negotiations over the next installment on Greece's bailout proved successful. Greece will get some €44 billion ($75 billion) after negotiators from the eurozone and the International Monetary Fund came together on a long-term deal to reduce the country's debt load. For its part, Greece must implement additional austerity measures and reforms even as it faces rising poverty and unemployment levels.
Despite the deal, experts warned that weak economic growth in Europe and the continent's debt crisis would continue to weigh on prices.
"The measures approved by the eurozone finance ministers and IMF will provide some momentary upside to oil prices," said Edward Bell, a commodities analyst at the Economist Intelligence Unit. "However, the eurozone has not yet escaped its economic woes and there are no clear signs of a recovery in demand, meaning we expect there will be a drag on oil prices going into 2013."
Brent crude, which is used to set prices for many international varieties of oil, rose 12 cents to $111.04 a barrel on London's ICE Futures exchange.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 0.55 cent to $2.7094 a gallon.
— Natural gas gained 2.6 cents to $3.756 per 1,000 cubic feet.
— Heating oil rose 0.67 cent to $3.0661 a gallon.
Pamela Sampson in Bangkok contributed to this report.