Forexpros – Crude oil futures were higher during European morning trade on Thursday, as the previous day’s drop to the lowest since November created bargain buying opportunities for investors, but sentiment remained vulnerable amid fears over a potential Greek exit from the euro zone.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD93.40 a barrel during European morning trade, gaining 0.65%.
It earlier rose by as much as 2.4% to trade at a session high of USD93.71 a barrel. Prices touched USD91.81 a barrel on Wednesday, the lowest since November 3, 2011.
Oil futures have been on a rapid decline since the uncertain outcome of the May 6 elections in Greece, which threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
The June WTI contract has lost more than 11% since the start of May.
But futures recovered on Thursday, as the sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further after futures moved into oversold territory.
Market participants noted strong support for prices at the USD92.75-a-barrel-level.
Despite the day’s gains, market sentiment was set to remain fragile as debt-stricken Greece called for new elections to take place on June 17. The vote will likely determine whether the highly indebted country remains in the single currency area.
Fears over the health of the country’s banking sector will also likely keep sentiment on the back foot, after reports surfaced Wednesday that the European Central Bank had stopped providing liquidity to some Greek banks as they have not been successfully recapitalized.
World Bank President Robert Zoellick said Greece’s exit could undermine confidence in the euro area and trigger another liquidity crisis.
There are worries that the region’s sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil. The euro zone accounted for nearly 12% of global oil consumption in 2010, according to data from British Petroleum.
Meanwhile, a larger-than-expected build in U.S. oil supplies last week is forcing traders to refocus on the supply and demand picture.
The U.S. Energy Department said in its weekly report that crude oil inventories rose by 2.1 million barrels last week to a total of 381.6 million barrels as of last week, the highest level since August 1990, underscoring fears over a slowdown in oil demand from the U.S.
Enbridge and Enterprise Products Partners were scheduled to reverse flows on the Seaway pipeline, pumping crude south from Cushing, Oklahoma, to the Gulf Coast, in what could ease a U.S. supply glut.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery was down 0.1% to trade at 109.70 a barrel, with the spread between the Brent and crude contracts standing at USD16.30.
Brent crude, the European benchmark, is more than 14% off its intraday high of USD128.38 hit on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran’s nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.
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