Oil prices hold firm after slump
Oil prices edged higher Thursday after an overnight slump sparked by heightened concern over the eurozone debt crisis, the strong dollar and OPEC's decision to hold output steady, analysts said.
In late afternoon trade, the price of Brent North Sea crude for delivery in January added 43 cents to $105.45 a barrel.
New York's main contract, light sweet crude for January, gained just four cents to $94.99.
"Today's price move is just a correction" to Wednesday's losses, said Sucden Financial analyst Jack Pollard. "We see a correction higher in tandem with a firmer tone in equity markets."
Oil was holding to positive territory on Thursday, boosted also by a sharp downturn in US weekly jobless claims and Spain's surprisingly successful debt sale.
The market slumped on Wednesday as fresh worries over the eurozone debt crisis once again sapped confidence, while OPEC ministers accepted current higher output levels, albeit without setting new quotas.
Oil "joined in the broader commodity sell-off yesterday, suffering from increased macro pressure and a continuous US dollar rally," said VTB Capital analyst Andrey Kryuchenkov.
"The market paid little attention to a US crude inventory draw, or indeed OPEC's regular policy meeting in Vienna on Wednesday."
The euro plunged Wednesday to an 11-month low at $1.2946 after Italy had to pay very high rates to raise fresh funds from the markets.
The currency has since clawed back ground and stood at $1.3007 in Thursday afternoon deals in the wake of the Spanish bond issue.
A stronger dollar makes dollar-denominated oil more expensive for buyers using weaker currencies, like the euro, and this tends to dampen demand and prices.
The Organization of Petroleum Exporting Countries (OPEC) said Wednesday that output will be maintained at 30 million barrels per day (bpd), acknowledging it had been consistently breaking its own quotas.
Excluding the production of Iraq -- which is not held to quotas -- OPEC output in November was about 11 percent, or more than three million barrels, above the official group limit of 24.8 million bpd.
OPEC, whose 12 members produce about one third of the world's oil supply and include Saudi Arabia, meets periodically to set production levels.
"As OPEC decided to keep the production levels at 30 million bpd, the main focus has transferred to the ongoing debt crisis in the eurozone with ongoing concerns about the future of the European economies," Pollard said.
© 2011 AFP