By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures edged up Thursday as investors were enticed back to the market after the previous session’s slump.
Oil for July delivery CL1N -0.03% gained 28 cents, or 0.3%, to $95.11 a barrel on the New York Mercantile Exchange.
Crude on Wednesday tanked nearly 5%, its biggest one-day drop since May 11 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 gave some early support to crude. However, the dollar index DXY +0.19% , which compares the U.S. unit to a basket of six other currencies, recently rose to 75.766 from 75.630 late Wednesday.
The greenback tends to move inversely to dollar-priced commodities such as oil.
Some support also came from a short- and a medium-term report from the International Energy Agency, which raised its five-year oil price forecast on Thursday, citing higher oil demand than previously expected.
In the short term, the IEA said there is a danger of “overheating in prices” resulting in economic damage this year if the Organization of the Petroleum Exporting Countries doesn’t produce extra oil. Read more about the IEA outlook.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
