OIL at $85 level after Greece vote image

Oil hovered above $85 a barrel Monday in Asia after Greek election results suggested the country will stay in the euro area.

The election result looked likely to yield a coalition government led by conservative New Democracy but leaves an emboldened SYRIZA bloc to rally angry opposition in the streets to the punishing terms of the bailout.

Traders said the news from Greece would provide more relief for the markets than upward momentum.

The Greek election result also boosted the euro, which underpinned crude prices. A weaker U.S. dollar makes commodities traded in dollars such as oil cheaper for investors with other currencies. The euro rose to $1.2679 on Monday from $1.2637 late Friday in New York.

However, the pro-bailout party’s victory does not indicate that the Greek voters are embracing the tough reforms tied to the bailout package but only that their fear overruled anger.

“The Greek people understood that if they voted to stay out of the euro, it would lead to sharply more pain in the immediate term. Consensus still believes that Greece will eventually leave the euro zone, and that the election has merely bought time for this eventuality,” said a note from DBS Group Research.

Also in focus for oil markets, Saudi Arabia’s Crown Prince Nayef bin Abdul-Aziz al-Saud died in Geneva over the weekend, according to reports. Saudi Arabia is one of the world’s largest producers of oil.