By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Crude oil futures edged back up in electronic trading Thursday, supported by a weaker dollar, while investors awaited fresh developments in Greece’s sovereign debt-crisis.
Oil for July delivery CL1N +0.26% gained 69 cents, or 0.7%, to $95.50 a barrel on the New York Mercantile Exchange during Asian trading hours.
Crude suffered its biggest one-day drop since May 11 earlier in the North American session, shedding nearly 5% as fresh Greek debt fears and weak U.S. economic data rattled global markets.
The Greek prime minister is expected to form a new government on Thursday, as the fiscal crisis in the nation deteriorates. Read more about Greece.
“It’s all about confidence, in the market and the economy. Wednesday was negative for confidence, and as a result oil fell down quite aggressively,” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.
“Given the U.S. recovery, Greece’s debt-concerns and China’s slowing economy, the market is now questioning whether asset prices are at the right level, particularly oil,” Barratt said.
Barratt forecasts oil will hold around $95 a barrel in the short term, and could move as low as $88 over the next month.
“Technically and fundamentally, we’ve strapped on the bearish hat. Oil is still volatile. We have not discounted Libya. … That opens the way for oil to potentially hit down to $90 or $88 a barrel,” he said.
The weaker dollar helped support crude’s gains, as the dollar index DXY +0.33% , which compares the U.S. unit to a basket of six other currencies, fell to 75.468 from 75.630 late Wednesday.
The greenback tends to move inversely to dollar-priced commodities such as oil.
Virginia Harrison is a MarketWatch reporter based in Sydney.
