Oil Prices Rebound On Bargain Hunting; But euro Zone Worries Remain
Oil prices have rebounded slightly as investors went bargain hunting after New York crude slumped below $US90 a barrel the previous day, analysts say.
New York’s main contract, West Texas Intermediate (WTI) crude for delivery in July, jumped $US1.17 to $US91.07 a barrel after dropping to $US89.90 on Wednesday – its lowest since October.
Brent North Sea crude for July meanwhile gained 89 cents to $US106.45 after tumbling almost $US3 the previous day to a five-month low.
Prices slumped on both sides of the Atlantic on Wednesday as the US currency rallied on eurozone debt worries, making dollar-denominated oil more expensive.
“Prices have stopped sliding because some investors see this low level as a buy opportunity,” said Victor Shum, an analyst at Purvin and Gertz international energy consultants.
Singapore-based Shum added that prices were also supported by the threat of oil supply disruptions in the Middle East.
“The prospect of supply disruptions is still there. The US and European Union embargoes on Iranian oil will still go ahead as planned despite the current talks,” he said.
Tough talks aimed at helping resolve the stand-off between major producer Iran and the West over Tehran’s nuclear program entered an unscheduled second day on Thursday in Baghdad, with both sides still at odds.
Major powers Britain, China, France, Russia and the United States plus Germany have tabled a proposal that included sweeteners to persuade Iran to abandon enriching uranium, but Tehran baulked at the offer.
Iran has faced crippling sanctions over its nuclear program, which much of the international community believe is masking a push to develop atomic weapons.
Tehran denies the claims and has threatened to shut the Strait of Hormuz – a major conduit for Gulf oil exports – if further sanctions are imposed.
Investors’ attention was also on the eurozone debt crisis.
EU leaders at a summit overshadowed by fears Greece could leave the euro pledged support on Wednesday for Athens, as officials behind the scenes reportedly considered the doomsday scenario of an exit.
“For now the top of the mind issue is still Greece, the main reason why oil took a pounding overnight,” said Shum.
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