Crude Moves 0.9% Higher, Climbs Back Over $90/Bbl
HOUSTON - U.S. crude-oil futures inched higher to move back above the psychologically significant $90-a-barrel barrier Thursday as some traders said the market is at a crossroads following the steep selloff so far this month.
The July contract for light, sweet crude on the New York Mercantile Exchange settled 0.9%, or 76 cents, higher at $90.66 a barrel after closing at $89.90 Wednesday, when it fell below $90 for the first time in seven months.
The move to the $90 threshold has prompted traders to do some "damage assessment" after U.S. crude futures have fallen 10% so far this month, said Tim Evans, an analyst with Citi Futures Perspective.
"Is it a price opportunity [for a move up], or the indication of a bear market?" he said, adding that "today we are performing triage" after the recent fall.
Kyle Cooper, managing partner of IAF Energy Advisors, said that the rebound was a natural reaction to a precipitous fall, adding that around $90, crude was getting close to "fair value."
"I don't think it's really out of whack anymore," he said.
Traders said that if futures maintain a sustained move below $90 a barrel, they would likely continue to tumble to $85.
"If we start making new lows again, that'll be the signal that the downtrend is gaining traction," said Andy Lebow, an oil analyst with Jefferies & Co.
Phil Flynn, an analyst with PFG Best, said that the crude market was "testing the lower end of the trading range," but that its inability to sustain earlier gains was an indication that "the concerns of the last couple of days haven't gone away." He was referring to worries that resurgent worries about the euro-zone debt crisis could cut both global economic expansion and demand for crude.
Meanwhile, July ICE Brent futures gained 99 cents, or 0.9% to $106.55.
Traders also were monitoring the progress of talks in Baghdad among Iran and world powers--the U.S., U.K., China, Germany and France--on Tehran's nuclear ambitions. Wednesday's marked optimism on talk of a possible agreement gave way to more caution Thursday. Iran demanded that the West ease sanctions on Iran oil exports prior to additional negotiations.
The clash over Iran's nuclear ambitions raised fears that Tehran might move to disrupt crude supplies.
These fears may have contributed to the small pop seen in crude prices earlier in the day, but soon traders "ran out of reasons to be buying, and euro concerns creeped back into their minds," Flynn said.
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