Oil squeezes out a gain

By Chavon Sutton, staff reporter

NEW YORK (CNNMoney.com) -- Crude oil prices rose after a late bump-up in equities overshadowed a mix of bearish news.

What are prices doing: Crude for June delivery inched 2 cents higher to settle at $83.70 a barrel. Prices fell to as low as $82.60 during Thursday trading.

For more commodities prices, click chart.

A spate of mostly upbeat earnings reports in the U.S. helped to boost oil prices earlier this week, after they fell 3% last Friday following the Goldman Sachs (GS, Fortune 500) fraud charges.

But the earnings news was overshadowed this week by weak demand, European economic woes, and the Icelandic volcano, which has crippled international travel and shipments.

Oil prices are down about 2% this week, but are 80% higher than they were at this time last year.

What's moving the market: Prices struggled to gain momentum Thursday amid fresh concerns over Greece's economic woes and the strength of the economic recovery.

The European Union said that Greece's budget deficit was worse than previously forecast, which helped to push the dollar 0.7% higher against the euro. Credit rating agency Moody's Investors Service later downgraded the country's debt rating.

A stronger greenback makes crude, which is denominated in the U.S. currency, more expensive for foreign investors. This, in turn, tends to stifle demand and prices.

The government's jobless claims report, which came in on par with analyst estimates, did little to turn things around, sending the Dow Jones industrial average (INDU), an indicator of strength or weakness in the economy, down steeply.

But stocks pared losses after President Obama's speech on financial regulatory reform allayed fears that the measures would be swift and overly strict.

What are analysts saying: "The equity markets came from the abyss," boosting oil prices, said Rich Ilczyszyn, senior market strategist for futures broker Lind-Waldock.

Though there is no direct correlation between the stock and oil markets, many analysts say traders have been looking to equities for some bright spots among the bad news.

On Wednesday the Energy Information Administration said that crude oil stocks rose by 1.9 million barrels last week, shocking analysts who only expected an increase of 300,000 barrels.

High levels of supply imply low demand, which has given many analysts pause about the current level of crude prices.

The EIA's data is "an acknowledgement that there has yet to be a substantial recovery in fundamentals," said Mike Fitzpatrick, vice president of energy for MF Global.

"Oil prices at these levels contain more than a bit of wishful thinking," he added.  To top of page

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