Oil prices rebound slightly from heavy losses

LONDON: World oil prices rebounded slightly on Thursday as traders went bargain-hunting, and after the International Energy Agency upgraded its forecast for global demand, analysts said.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for July delivery, added 39 cents to $95.20 a barrel.

Brent North Sea crude for August won $1.41 to $114.42 a barrel in London morning deals on the contract's first trading day.

Commodity traders were buying up crude after its overnight dip, said Victor Shum, a Singapore-based analyst at Purvin and Gertz international energy consultancy.

"Traders view this as a buying opportunity after oil prices tumbled," he told AFP.

Crude futures had plunged dramatically on Wednesday to below $95 a barrel in New York as investors fretted about fresh signs of weakness in the US economy and tensions in Greece which sent the dollar jumping.

But prices won modest support on Thursday after the IEA raised its global oil demand forecast for 2011 by 0.1 million barrels per day (mbd) to 89.3 mbd.

The Paris-based IEA added that it sees demand rising to 90.63 mbpd in 2012, an increase of 0.6 mbd from its previous forecast that was given in December.

The bull run in oil prices has largely been driven by fundamentals of supply and demand, with emerging markets set to keep stoking demand and keep prices above $100 a barrel, it added.

The agency also hiked its medium-term price assumption by $15-$20 per barrel, with an average price of $103 per barrel now underpinning its forecasts.

New York crude prices had dived more than $4.50 in late US trade on Wednesday, sinking below $95 as investors fretted about the US economy and the Greek debt crisis.

Data from the US released Wednesday showed manufacturing conditions in New York falling into negative territory for the first time since November 2010 as inflation rates soared to their highest level in more than two-and-a-half years.

Markets had also been rattled by the failure of eurozone finance ministers to reach an accord in Brussels Tuesday on a second bailout package aimed at averting a Greek debt default, sending the dollar sharply higher against the euro.

Copyright AFP (Agence France-Presse), 2011