By early afternoon in Europe, benchmark oil for August delivery was up 51 cents to $95.45 a barrel in electronic trading on the New York Mercantile Exchange. Crude last settled down 48 cents at $94.94 on Friday. Financial markets in the U.S. were closed Monday for the Independence Day holiday.
In London, Brent crude for August delivery added 89 cents to $112.28 a barrel on the ICE Futures exchange.
Barclays Capital raised its forecast for 2012 oil prices, boosting its Brent price estimate by $10 to $115 a barrel, and its Nymex forecast by $4 to $110 a barrel next year.
At the same time, Barclays commodities analysts left their 2011 expectations for Brent steady at $112 a barrel and lowered their average annual price of the 2011 Nymex contract by $6 to $100.
“The increase in 2012 is based on a further narrowing of global spare capacity … and by our view that the overall geopolitical context of the market is likely to become increasingly uncertain as 2012 progresses,” Barclays Capital said in an update on oil markets. “The main sources of demand growth in 2012 are expected to be China, India, Saudi Arabia and Brazil.”
Weighing on oil prices was a stronger U.S. dollar, which makes crude more expensive for investors with other currencies.
The euro fell to $1.4468 Tuesday from $1.4541 late Monday while the dollar rose to 81.12 yen from 80.75.
Crude fell to near $90 early last week after the International Energy Agency announced June 24 the gradual release of 60 million barrels of oil from strategic reserves.
But oil prices have rebounded to where they were before the IEA announcement as the dollar weakened against the euro after the Greek parliament approved austerity measures, averting a debt default.
Some analysts, however, say prices risk falling again.
“If Russian media reports that Libyan leader Gadhafi would be willing to step down under certain conditions are in fact correct, the geopolitical risk premium on oil would drop further, said a report from Commerzbank in Frankfurt. “In this case, the price could retreat quite considerably toward the level seen for a time after the IEA announced that it would be releasing strategic oil reserves. ”
In other Nymex trading in August contracts, heating oil rose 1.19 cents to $2.9364 a gallon while gasoline fell 0.84 cent to $2.9642 a gallon. Natural gas futures rose 5.7 cents to $4.368 per 1,000 cubic feet.