Oil rebounds, remains above $95 a barrel

BANGKOK — Oil prices recovered slightly Friday from its sharpest drop in more than seven months.

Benchmark oil for August delivery rose 22 cents to $95.36 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange.

The contract for July settlement sank $2.84, or 2.9 percent, to $95.40 a barrel on the Nymex on Thursday. The sharp drop was precipitated by weak Chinese manufacturing data and signals that U.S. central bank is preparing to scale back its stimulus policies.

Analysts said rising crude output combined with the Fed's tapering down of asset purchases later this year have put downward pressure on oil prices. But Syria's civil war and Iran's pursuit of nuclear projects were risks that had the potential to disrupt energy markets and could cause prices to rise.

"The geopolitical premium must not be forgotten, and may not remain muted for long," said analysts at Credit Agricole CIB in Hong Hong in a market commentary.

On Wednesday Fed chairman Ben Bernanke suggested that he was optimistic about the U.S. economy — and that the Fed might start scaling back its massive $85 billion-a-month bond-buying program this year if conditions continue to improve. The Fed could end the program by the middle of next year, Bernanke said.

The Fed program has kept borrowing costs near historic lows for consumers and business. It has also helped boost the equities and energy markets. Also weighing on oil prices was a survey showing a slowdown in manufacturing in China. HSBC's preliminary purchasing managers' index fell to a nine-month low of 48.3 in June, down from 49.6 in May. Numbers below 50 indicate a contraction.

Brent crude, a benchmark for many international oil varieties, rose 36 cents to $102.51. Brent plunged $3.97, or 3.7 percent, to end on Thursday at $102.94 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

— Wholesale gasoline rose marginally to $2.7784 a gallon.

— Heating oil rose 0.8 cents to $2.8814 per gallon.

— Natural gas rose less than 0.1 cent to $3.883 per 1,000 cubic feet.