Oil futures pare losses

Brent turned slightly higher and US crude oil pared losses on Thursday in choppy trading as the euro and dollar reacted to the European Central Bank's (ECB) interest rate cut. The dollar initially strengthened against the euro after the ECB cut interest rates to record lows and announced negative interest rates on overnight deposits. Brent bounced off a three-week low and US crude from a two-week low hit after the ECB announcement.
Crude, priced in dollars, comes under pressure when the greenback rises as it becomes less affordable to holders of other currencies. "The ECB decision triggered another wave of profit taking in the oil market and the dollar strengthened, but the euro recovered and crude did also, and the geopolitical concerns are still out there," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
US crude was down 36 cents to $102.28 at 12:55 p.m. EDT (1655 GMT). It recovered after dropping to $101.60, its lowest since May 16. Brent crude futures was up 1 cent at $108.41 a barrel, after dropping to $107.77, its lowest since May 9. "You have this tug-of-war going on. Hedge funds are increasing their net longs in the Brent, and that's going to be supportive for WTI," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago, referring to West Texas Intermediate, the benchmark for US crude.
"Europeans are still nervous over supply, so they're bidding up Brent prices." Last month, political tensions pushed Brent above $111 but prices have shed about 3 percent since then. Ukraine's President-elect Petro Poroshenko said he may discuss a plan to end violence in eastern Ukraine with Russian leader Vladimir Putin. Putin will hold face-to-face meetings with German Chancellor Angela Merkel, French President Francois Hollande and British Prime Minister David Cameron at a D-Day anniversary gathering in France later this week.
This helped allay concerns that a conflict in Ukraine, a main gas supply route to Europe from Russia, could disrupt oil supplies as well. The US Labour Department will release its monthly jobs report, which is closely watched by financial markets around the globe, on Friday at 8:30 a.m. (1230 GMT).