By Sara Sjolin and Michael Kitchen, MarketWatch
LONDON (MarketWatch) — Crude-oil futures on Tuesday partly climbed back from a steep decline the prior day, as worries over political jitters in the troubled euro zone faded after stronger-than-expected business-activity data from the region.
New York-traded March crude-oil futures CLH3 -0.70% added 64 cents, or 0.7%, to trade at $96.81 a barrel, partly regaining a $1.60 drop from Monday during the regular New York Mercantile Exchange session.
Likewise, March futures for rival London-traded benchmark Brent North Sea crude UK:LCOH3 +1.01% rose 96 cents, or 0.8%, to $116.59 a barrel after a $1.15 retreat Monday.
Monday’s losses tracked a rally in the U.S. dollar amid a political- corruption scandal in Spain, with additional support coming from reports that the U.S. and Iran may open talks over the latter’s nuclear program. Read: Oil settles lower after last week’s rally
On Tuesday, however, political concerns in Europe were overshadowed by a better-than-expected purchasing managers’ index for January. Markit’s euro-zone composite PMI rose to 48.6 from an earlier estimate of 48.2, marking a ten-month high, with both manufacturing production and service-sector business activity declining at the slowest rate since last March. See: Euro-zone PMI signals downturn eased in January
The euro strengthened against the dollar EURUSD -0.05% , but not enough to bring the ICE dollar index DXY +0.63% into the red. The index, which measures the greenback against a basket of six other currencies, climbed to 79.62 from late Monday’s 79.547. See: Dollar pulls higher as euro worries return
A rising U.S. unit can dampen demand for dollar-denominated commodities as it makes them more expensive for holders of other currencies.
Turning point?
Analysts at Citi Futures, who have been bearish on oil recently due to what they see as a well-supplied global market, remained unsure whether Monday’s losses marked a turning point for crude.
Oil has climbed more or less steadily since its recent lows in early December, when it traded below $86.
“While a further correction in equity markets and rising U.S. crude-oil stocks will test market sentiment, we think it will take some time to see if it proves sufficient to reverse what has been a seven-week cycle of long accumulation by money managers,” they wrote late Monday.
The American Petroleum Institute’s weekly U.S. crude inventory report was due out at 4:30 p.m. Eastern time, with the more influential U.S. Energy Information Administration report slated for the following day.
Elsewhere in the energy complex, heating oil for March delivery HOH3 +2.46% gained 3 cents to $3.19 a gallon, with March gasoline RBH3 +0.53% picked up 4 cents to $3.05 a gallon.
March natural gas NGH13 -0.06% , extended Monday’s 1-cent gain on the Nymex by another three pennies to sell for $3.34 per million British thermal units.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
