Oil prices remained near $84 on Friday despite fears that Greece's debt crisis will hurt economic recovery and energy demand. Analysts, however, predicted lower prices in the near term.
By midday in Europe, benchmark crude for June delivery was up 10 cents to $83.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents to settle at $83.70 on Thursday.
"Oil prices are largely defying the negative factors of the past few days, such as the firm U.S. dollar and rising U.S. stocks," said analysts at Commerzbank in Frankfurt. "We put the relative strength of oil prices down to the continued interest of financial investors, but also consider it unlikely that oil prices will be able to decouple themselves from the negative overall conditions on a lasting basis."
Greece's problems deepened Thursday when Europe's statistics agency found the country's budget deficit last year was larger than previously thought, raising its borrowing costs. Moody's Investor Services downgraded Greece's debt and said more downgrades could be coming.
On Friday, Greece requested a joint eurozone-International Monetary Fund financial rescue as market pressure pushed the debt-ridden country's borrowing costs to unsustainable levels.
"There is a lot of uncertainty about the situation in Greece. The crisis could be contagious and could impact the whole euro zone and eventually the world," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.
Greece's debt crisis has undermined confidence in Europe's shared currency, the euro, and raised the troubling possibility that other weak European economies such as Spain and Portugal may also need to be bailed out.
"Amid this turmoil, we would not be surprised to see the dollar continue to strengthen in the weeks ahead, and likely test, and perhaps even break the $1.30 level against the euro," said analyst Edward Meir at MF Global in New York. "Such strength should deter any meaningful rallies in the crude oil market from taking place, and instead, may increase the odds for a rather sharp break to the downside."
By midday Friday, the euro had recovered from a session low of $1.3202 and rose to $1.3311 from $1.3260 late Thursday in New York. The British pound advanced to $1.5358 from $1.5366.
In other Nymex trading in May contracts, heating oil rose 0.49 cent to $2.2199 a gallon and gasoline gained 0.61 cent to $2.3063 a gallon. Natural gas dipped 2.6 cents to $4.102 per 1,000 cubic feet.
In London, Brent crude advanced 14 cents to $85.81 on the ICE Futures exchange.
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Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, and Elena Becatoros in Athens contributed to this report.
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