LONDON—Crude-oil futures held to small gains after the German parliament handily approved legislation to expand the euro zone's rescue fund in order to secure Greece's bailout, easing immediate fears over the region's debt crisis.
German lawmakers passed the reform of the European Financial Stability Facility, or EFSF, with 523 "yes" votes, while 85 lawmakers voted "no" and three abstained.
Ahead of the New York day on Thursday, the front-month November contract on the New York Mercantile Exchange was up 20 cents, or 0.3%, at $81.41 per barrel. The front-month November Brent contract on London's ICE futures exchange was up 58 cents, or 0.6%, at $104.39 a barrel.
Oil slumped somewhat from earlier levels after the German vote.
Brent and Nymex crude had been up around 1% in early London trade after the euro touched an intraday high against the dollar on expectations that German Chancellor Angela Merkel was likely to get enough backing from her own coalition parties to pass the bill.
Crude prices typically rise when the dollar falls as oil becomes cheaper for holders of other currencies.
Analysts said the dollar weakness brought out some funds and other investors that had been waiting for an opportunity to get back into the market, despite the risks of an economic slowdown and the consequent impact on oil demand.
But despite the optimism on the back of the German vote, the potential for oil prices to again drop remained a worry as the euro zone debt crisis rumbles on.
"The Greek debt situation has worsened, Italy has joined the list of walking wounded and concerns about bank balance sheets have increased. The result is that the package has become too little, too late," said David Hufton at PVM Oil Associates.
In a report dated Wednesday, Morgan Stanley cut its Brent crude forecast for 2012 to $100 a barrel from $130 a barrel on the prospects of higher supplies from Libya and elsewhere amid a weaker demand outlook. The bank said there was a downside risk in the first half of next year with a fall in Brent prices to $85 to $90 a barrel "plausible."
However, the bank expects firmer fundamentals in the second half of 2012 as demand stabilizes and supply growth ebbs, potentially driving Brent prices back near $110 a barrel.
On the data front, investors will be looking to U.S. second-quarter gross domestic product and initial jobless claims at 8:30 a.m. ET, and pending home sales at 10 a.m.
Write to Selina Williams at selina.williams@dowjones.com
