LONDON—Nymex crude-oil futures are trading below $80 a barrel in London Thursday, pulled lower by a firmer dollar, which makes oil more expensive for holders of other currencies.
Increased anxiety over Greece's debt problems and implications for the euro zone undermined the euro further and boosted the safe-haven dollar Thursday.
The front-month April contract on the New York Mercantile Exchange was trading 43 cents lower at $79.57 a barrel. The front-month April Brent contract on London's ICE futures exchange was down 33 cents at $77.76 a barrel.
"Energy prices are very choppy, and it is hard to identify any short-term market direction from the action we have been seeing over the past few days," said MF Global analyst Ed Meir. "We would use the direction of the dollar as the predominant guiding force," he said. Mr. Meir expects the dollar still has more room to run on the upside—the Fed chairman's testimony notwithstanding—and as a result, "should keep the downward pressure on commodities for a little while longer."
Further denting sentiment, Federal Reserve Chairman Ben Bernanke delivered a very downbeat report on the U.S. economy to Congress Wednesday in which he predicted U.S. interest rates would remain exceptionally low for an extended period.
Demand for crude and petroleum products in the U.S remains in the doldrums. U.S. government inventory data for the week ending Feb. 19 showed a build of 3.03 million barrels of crude, while median expectations were for a build of around 1.9 million barrels.
Looking more broadly at drivers for physical supply and demand, a week-long protest that shut down oil major Total SA's French refineries ended Wednesday after workers at five plants voted to call off their strike. Industrial action at the company's Flanders refining complex near Dunkirk, however, continues, as Total considers whether to end its refining operations.
Meanwhile, full production has been restored at Canadian energy company Nexen Inc.'s Buzzard oil field in the North Sea. Oil is now flowing at between 200,000 and 220,000 barrels a day, the company said. Lower volumes of medium-sour Buzzard crude in the Forties oil stream increased the quality of Forties, which is also the most common price-setter of Dated Brent. Reflecting the stronger prompt values, the spread between Dated Brent and the Brent third-month contract narrowed to just over a $1 last week but has subsequently widened.
Looking at technical charts, both crude-oil futures benchmark contracts remain rangebound despite "some interesting zig-zags in a very tight price range," said an analyst at First Energy. Nothing in the fundamental picture has changed, therefore the latest price bounce to Nymex crude to $80 a barrel is yet another twist, where the market appears to be moving in one direction and suddenly reverses, the analyst added. He expects prices will run out of steam again and begin another descent back toward the $75-a-barrel threshold.
Elsewhere, the ICE's gasoil contract for April delivery was down $1.50 at $634.25 a metric ton, while Nymex gasoline for March delivery was down 1.70 cents at 218.97 cents a gallon.
