By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures inched up Thursday as investors were enticed back to the market after the previous session’s slump.
Oil for July delivery CL1N +0.23% gained 10 cents, or 0.2%, to $94.92 a barrel on the New York Mercantile Exchange, losing some steam as floor trading progressed and news of a manufacturing slowdown in the Philadelphia area acted as a drag on prices.
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 dollar’s gains cooled from the prior session, when a sharp jump against the euro triggered an unwinding of trades tied to a lower dollar.
The dollar index DXY +0.25% , which compares the U.S. unit to a basket of six other currencies, recently traded at 75.677 from 75.630 late Wednesday. The euro EURUSD -0.18% fell to $1.4147 from $1.4162.
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.
Crude-oil futures had turned briefly lower after the Philadelphia Federal Reserve said manufacturing activity in the Philadelphia area fell to its lowest level in 31 months.
The Philadelphia Fed’s manufacturing index fell from +3.9 in May to -7.7 in June. Economists polled by MarketWatch had forecast a reading of +5.5. The figures come after a negative reading on Wednesday from a similar New York-area gauge.
Earlier Thursday, investors digested news on jobless claims and housing starts.
The number of workers who filed new applications for unemployment benefits fell by 16,000 to 414,000 in the week ended June 11, the Labor Department said. Read more about jobless claims.
Ground-breaking on new homes improved a bit in May, but remained depressed. Read more about housing starts.
Meanwhile, natural-gas futures held to losses Thursday after the Energy Information Administration reported a supply increase within expectations.
Natural gas for July delivery NG11N -2.51% retreated 8 cents, or 1.7%, to $4.51 per million British thermal units.
The EIA reported an addition of 69 billion cubic feet to the nation’s supply on the product for the week ended June 10. Analysts polled by Platts had expected an increase between 68 and 72 Bcf.
