LONDON—Crude-oil futures built on Tuesday's 4% jump as the euro slipped against the dollar, but Wednesday's gains so far have been modest.
A stronger dollar typically weighs on investors' appetite for holding oil, as the dollar-denominated commodity becomes more expensive for holders of other currencies.
"The current advance could conceivably take us to the $80 [a barrel] level based on technicals alone, but we suspect that gains beyond that point will be hard to sustain given the otherwise uninspiring fundamental backdrop," said Edward Meir, senior commodity analyst at MF Global in New York.
The front-month March contract on the New York Mercantile Exchange was trading up 32 cents at $77.33 a barrel.The front-month April Brent contract on London's ICE futures exchange was 35 cents higher at $76.03 a barrel.
On Tuesday, a combination of gains in equity markets and a weaker dollar lifted oil prices by more than $3 a barrel. The euro was helped by subsiding fears over Greece's significant sovereign debt after European finance ministers endorsed a decision Tuesday that Greece be given until March 16 to show progress toward a goal of slicing the equivalent of four percentage points of gross domestic product from its budget deficit this year.
Traders will keep a close watch on developments in France after oil major Total SA said its refineries in the country were producing at minimum levels due to industrial action by its employees Wednesday. The company said it has taken steps to ensure supplies to customers.
Union Confederation Generale du Travail, or CGT, said in a statement that 95% of employees at all of Total's six refineries in France were on strike, while 80% of the group's French storage units were also hit by the action, planned since Feb. 3 to protest against the company's intention to cut refining capacities.
The first of this week's U.S. inventory data from the American Petroleum Institute, due later Wednesday, is likely to garner attention among oil traders after both the API and the Department of Energy data were delayed by a day due to Presidents' Day holiday Monday.
Analysts surveyed by Dow Jones Newswires expect to see a 1.6 million-barrel build in crude oil inventories and a 1.3 million-barrel build in gasoline stocks. However, forecasts are for a 1.6 million-barrel decline in distillate inventories.
Looking ahead, some analysts argue that the crude market's increasing price inelasticity is likely to lead to larger prices swings in the coming years.
"The market structure for oil is now extremely static and price-inelastic. As a result, large fluctuations in prices will likely remain the norm to bring medium-term supply-and-demand trends into balance," said Francisco Blanch at BofA Merrill Lynch Global Research.
Elsewhere, the ICE's gasoil contract for March delivery was $3.75 higher at $615.00 a metric ton, while Nymex gasoline for March delivery was up 92 cents at $1.9974 a gallon.
