WSJ:OIL FUTURES: Crude Retraces Losses After Draghi Comments
-- Crude retraced earlier losses after Draghi reassures on euro zone
-- US 2Q GDP data in focus
-- Geopolitical tensions continue to place a floor under prices
By Sarah Kent
LONDON--Oil prices turned positive Thursday, after encouraging statements from European Central Bank President Mario Draghi helped boost the euro, prompting oil to reverse earlier losses.
At 1032 GMT, the front-month September Brent contract on London's ICE futures exchange was 13 cents, or 0.1%, higher at $104.51 a barrel.
The front-month September contract on the New York Mercantile Exchange was trading down 9 cents, or 0.1%, at $88.88 per barrel.
The market got a slight boost after the ECB's Draghi said the central bank would do "whatever it takes" to preserve the euro, despite lingering worries that Spain may require a sovereign bailout and that the current measures will not be sufficient to prevent Greece from being forced to exit the currency bloc.
"People are wary of what's going to happen in Europe" said Rob Montefusco, senior commodities broker at Sucden Financial, adding that the market was very much following the headlines.
"The markets are very unsure where to go, they'll be playing it from the short side and suddenly the market just pops back up," he added.
U.S. economic data due for release in the next two days is very much in focus, with the market waiting for clues as to whether the Fed will embark on a fresh round of monetary easing after downbeat new home sales data Wednesday re-ignited the speculation on the subject.
The spotlight is on U.S. gross domestic product data for the second quarter, due Friday.
"It's very important to follow the data at the moment, but the interpretation of the data could significantly fire the market," said Eugen Weinberg, head of commodities research at Commerzbank. "Bad data could be a bad omen for the market but could be taken as sign of more easing by the Fed as well," he added.
For now, the geopolitical concerns that drove a sharp rally in oil prices last week have taken a back seat. South Korea intimated Thursday there was a "high chance" the country would resume imports from Iran soon, helping ease concerns over supply constraints as a result of stringent European Union and U.S. sanctions against the Islamic Republic.
Still, boiling tensions in the Middle East and worries the unrest in Syria will spread to neighboring countries will likely help keep a floor under oil prices, analysts said.
At 1032 GMT, the ICE's gasoil contract for September delivery was up $12.75, or 1.5%, at $899.00 per metric ton, while Nymex gasoline for September delivery was 36 points, or 0.1%, higher at $2.7198 per gallon.
