Brent crude oil futures rise as European demand seen higher
Brent crude oil futures rose and U.S. 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 and investors anticipated growing oil demand in Europe.
The dollar initially strengthened against the euro after the ECB cut interest rates to record lows and announced negative interest rates on overnight deposits.
"I think it took the markets a while to process what the implications are from these moves from the ECB, but the press conference by [ECB President] Mario Draghi propped up the view that these moves will make the economy more robust, and that speaks to what energy demand will be," said John Kilduff, a partner at Again Capital LLC in new York.
"It was a good economic data week for the continent," he added.
Brent bounced off a three-week low and U.S. crude from a two-week low hit immediately 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.
U.S. crude lost 16 cents to settle at $102.48, It recovered after dropping to $101.60, its lowest since May 16.
Brent crude rose by 39 cents to settle at $108.79 a barrel, after dropping to $107.77, its lowest since May 9.
The spread <CL-LCO1=R> between the two benchmarks closed at $6.31, after narrowing to $5.61, its lowest point since April 15.
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 MinisterDavid Cameron at a D-Day anniversary gathering in France later this week.
The European Central Bank said on Thursday concerns have risen about a possible escalation of tensions between Ukraine and Russia which could affect the euro zone via trade, financial links and oil prices.
"The geopolitical concerns are still out there," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
The U.S. Labor 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).
(Additional reporting by Lorenzo Ligato and Robert Gibbons in New York, Simon Falish in London and Florence Tan in Singapore; Editing by Dale Hudson, Jason Neely, Alden Bentley and Diane Craft)
