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Oil Prices Struggle to Hold Gains

NEW YORK ( TheStreet) -- Oil prices were wavering Thursday as buyers and sellers butt heads in the midst of an options expiration and as the euro gained against the dollar.

West Texas Intermediate (WTI) light sweet crude oil for January delivery was rising 16 cents to $95.11 a barrel, but has been wavering between positive and negative territory. The March Brent contract was rising $1.03 to $104.95.

"The large open interest in puts below the market will tend to be a drag on upward moves, while call holders will want to try and support the market above that level," said Tradition Energy analyst Addison Armstrong , in reference to the expiration of January WTI options Thursday. "There will be a battle between holders of puts and calls at that [$95] strike."

At nearby strikes, the largest open interest is at $90, where there are 22,035 puts, according to the latest data from the New York Mercantile Exchange. At the $95 strike, there are 10,225 puts versus 4,598 calls.

Oil prices were receiving a measure of support from the uptick of the euro over the dollar. The euro had been up 0.3% after a good Spanish debt auction. Further support was coming from signs that the European Central Bank still has more room to cut its benchmark interest rate to stimulate the economy after the European Union's statistics bureau said that the eurozone's inflation rate held steady at 3% in November.

A weaker dollar generally attracts more overseas buying into oil, which is typically denominated in dollars.

The upticks in oil today were also happening alongside the S&P 500's spike on robust economic data. Weekly jobless claims fell 19,000 to 366,000 in the week ended Dec. 10. Producer prices for November rose 0.3%. Manufacturing activity in the New York region increased to a better-than-expected reading of 9.53 in December, according to the Empire State manufacturing survey. Meanwhile, the Federal Reserve Bank of Philadelphia's business outlook survey rose to a reading of 10.3 from 3.6 in November.

However, industrial production for November fell 0.2% after a 0.7% gain in the prior month.

An improvement in Chinese manufacturing activity also lifted investor sentiment, though it still showed contraction. The HSBC preliminary PMI for December improved to 49 from November's final reading of 47.7.

Energy stocks were trading mixed. Hess (HES - Get Report) was rising 1.2% to $54.44; Apache (APA - Get Report) was adding 1.1% to $88.67; Anadarko Petroleum (APC - Get Report) was down 0.5% to $73.37; BP (BP - Get Report) was rising 1.4% to $41.68; Cnooc (CEO) was down 0.2% to $178.32; Petrobras (PZE - Get Report) was lower by 0.2% to $12.19; and Marathon Oil (MRO - Get Report) was rising 1.4% to $27.37.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.
Copyright 2011 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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