Oil prices bounded above $103 a barrel on Thursday after falling to another five-month low the previous day, drawing support from Hurricane Ike and Opec's surprise output cut while wary traders watched the US dollar. The dollar briefly touched a new one-year high against the euro on Thursday but weakened versus the yen.
Lending a touch of support to a commodities complex that has been battered by the unwinding of the short-dollar/long-commodities trade. US light crude for October delivery firmed 72 cents to $103.30 a barrel by 0547 GMT, after rallying more than $1 earlier in the session. That came after it dropped as low as $101.36 a day earlier after the pressure of a rising dollar and concerns about global demand outweighed earlier bullish news that Opec had agreed to cut output by about 500,000 bpd.
London Brent crude rose 48 cents to $99.45 a barrel. "While Opec has certainly drawn a line in the sand around the $100 level, it remains to be seen if the cartel can actually achieve the cuts outlined in the announcement," said Jonathan Kornafel, Asia director at US-based options trader Hudson Capital Energy.
Oil prices have tumbled 30 percent since hitting a record high above $147 a barrel three months ago, a descent barely slowed by a pair of hurricanes whipping through the US Gulf, home to a quarter of US oil production. US refinery utilisation plunged to 78.3 percent of total capacity in the week ending September 5, the lowest level since October 2005 when hurricanes Katrina and Rita ravaged Gulf coast refineries, data showed on Wednesday.
Prices also fell on Wednesday after the International Energy Agency cut its world oil demand forecasts for this year and the next as high prices and mounting economic troubles drive consumers and businesses to conserve. US oil demand is already running about 3.8 percent below last year, according to government data.