SINGAPORE (AP) — Oil prices slipped to near $96 a barrel Wednesday as the downgrade of Portugal's bonds renewed investors' concern about crude demand in Europe and helped boost the U.S. dollar.
By early afternoon in Europe, benchmark oil for August delivery was down 80 cents to $96.09 a barrel in electronic trading on the New York Mercantile Exchange. Crude gained $1.95 to settle at $96.89 on Tuesday.
In London, Brent crude fell $1.53 to $112.08 on the ICE Futures exchange.
On Tuesday, Moody's rating agency downgraded Portugal's government debt by four notches to junk status, saying the country will likely need more financial aid.
Portugal received a €78 billion ($112 billion) bailout from its European partners and the International Monetary Fund earlier this year.
The downgrade helped boost the dollar against the euro, making crude more expensive for investors holding other currencies.
The euro fell to $1.4331 from $1.4410 late Tuesday, while the dollar advanced to 81.07 Japanese yen from 81.04.
Portugal's plight also enlivened concerns that the European sovereign debt crisis will continue to spread across the continent and dampen its demand for oil.
Prices were boosted Tuesday by Barclays Capital's upward revision of its 2012 forecast for Brent by $10 to $115 per barrel on the expectation that robust economic growth in China, India, Saudi Arabia and Brazil will fuel greater crude demand.
"The quest for industrialization and urbanization has tended to dominate energy and oil usage over the past few years, a trend we expect to remain largely unaltered over the coming years," Barclays said.
Oil has rebounded from near $90 last week. Traders on Tuesday shrugged off lower equities, a stronger dollar, the end of the Federal Reserve's bond purchase program and the International Energy Agency's release of 60 million barrels of oil from strategic reserves.
Markets are awaiting information on the level of U.S. stockpiles of crude and refined products.
Data for the week ending July 1 is expected to show a draw of 2.5 million barrels in crude oil stocks and a rise of 500,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Wednesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Thursday.
Both reports come a day later than usual because of Monday's Independence Day holiday.
In other Nymex trading in August contracts, heating oil fell 2.6 cents to $2.9306 a gallon while gasoline slid 3.14 cents to $2.9460 a gallon. Natural gas futures dropped 3.7 cents at $4.326 per 1,000 cubic feet.