Oil bounces back above $90 per barrel

AP News
Posted: May 24, 2012 3:26 PM
Oil bounces back above $90 per barrel

Oil bounced back Thursday, a day after falling below $90 per barrel for the first time in months.

Benchmark U.S. oil rose 76 cents to $90.66 per barrel in New York. Brent crude, which is used to price international oil varieties, increased 99 cents to $106.55 per barrel in London.

Oil has fallen about $15 per barrel since May 1 and on Wednesday dropped below $90 for the first time since Oct. 21. That attracted some bargain hunters, analysts said, despite lingering uncertainty over future demand as China's economy slows and Europe's economy remains unsettled.

European leaders concluded a summit early Thursday with little agreement on how to fix the region's financial problems. Seven countries that use the euro are in recession, including Italy and Spain. Greece holds an election next month that could department if that country drops out of the eurozone, a developments many analysts feel will further destabilize Europe's economy.

Traders also kept watch on talks in Baghdad over Iran's nuclear program. Representatives of six nations, including the U.S., met with Iranian negotiators on Wednesday and Thursday. The talks ended Thursday with a plan to meet next month for another round of talks but agreement on little else.

Tensions between Iran and the West pushed up the price of oil near $110 per barrel earlier this year. Iran is the world's third-largest oil exporter, so there were concerns about supply disruptions from the Middle East.

Efforts by the United States, Europe and other countries to inhibit Iran's oil trade forced Iran to the negotiating table. Saudi Arabia, Libya and Iraq have delivered more oil to world markets to cover the potential loss of Iranian oil. That eased concerns about a shortage of supply and contributed to the drop in oil.

Oil prices fell below $90 a barrel Wednesday, the lowest level since October. Some traders may feel that's about as low as oil is going to go right now, particularly without a resolution on Iran, said PFGBest analyst Phil Flynn.

In other trading, natural gas prices fell after the government said inventories continued to build last week. The supplies are about 38 percent above the five-year average while demand remains weak.

Natural gas dropped 9 cents, or 3 percent, to $2.65 per 1,000 cubic feet. Natural gas is still up 75 cents from a 10-year low reached in April, although it's still down $1.70 from a year earlier.

Heating oil rose 1 cent to $2.82 per gallon and gasoline futures rose less than a penny to $2.88 per gallon.

Meanwhile, retail gasoline prices fell less than a penny overnight to $3.676 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's about 17 cents less than a month ago.