Singapore: Oil hovered near $80 a barrel on Thursday, as expectations of a rosier economic picture for the US are countered by concerns over Greece’s economy.
Oil returned most of its gains from earlier Thursday, as Greece’s economic crisis sparked concerns through global markets that it could spread through Europe and beyond.
Spooked investors turned to safe havens such as gold and the dollar, pushing their values higher.
US crude for June delivery rose 9 cents to $80.06 a barrel by 11:09am.
The contract dived more than 3% on Wednesday to below $80 a barrel for the first time in six weeks after US government data showed crude stocks at the key storage hub in Cushing, Oklahoma, rose 1.6 million barrels to a record of 36.2 million barrels.
London Brent crude gained 2 cents to $82.63 a barrel.
“The market is expected to recover slightly today after sharp declines of $6 to $7 over the past few days,” said Ken Hasegawa, a commodities sales manager at brokerage Newedge Japan.
Oil has seen strong support at $79, but prices may be capped at $82 on Wednesday, he said.
“We have to be careful how the euro will perform in the next few weeks. There is still room for the euro to further decline against the dollar. Oil could possibly go down further,” Hasegawa added.
The euro sank to its lowest level in over a year, falling below $1.28 in Asia and down over 10 percent since the start of the year.
Gold priced in euro struck another record at €918.74 on Thursday while the dollar rose 0.09 percent against a basket of currencies.
Analysts have said the euro is expected to remain weak as investors remain highly sceptical Greece will be able to carry out the tough austerity measures it promised in return for a €110 billion aid package from the European Union and the International Monetary Fund.
News of the death of Nigerian President Umaru Yar ‘Adua may create more uncertainty about the country’s oil production.
Nigeria has always been a supportive factor to crude prices as its production is often disrupted by militant attacks on pipelines, but political instability may lend more support to oil, Hasegawa said.
Yar Adua’s death may pave the way for the most hotly contested succession since the world’s 15th largest oil producer returned to democracy a decade ago.
Analysts are also watching the US jobless claims data due later on Thursday for further confirmation that the economic recovery is on track to boost oil demand.
Signs of a recovery in the labour market grew as reports on Wednesday showed job growth among private firms and plans for layoffs falling to their lowest in four years.
Latest US weekly oil data showed gasoline demand hit a record high for any April, while diesel consumption has started to recover, analysts at Barclays Capital said in a note.
Still, Energy Information Administration data showed gasoline stocks rose 1.2 million barrels to 224.9 million barrels, well above analysts’ forecasts.
“It does finally look as if diesel demand is beginning to join the path that the macroeconomic data implied it had to sooner or later,” the bank said.