SINGAPORE: Brent crude rose on Thursday, holding above $100 per barrel on expectations the United States will introduce measures to boost its economy and European policymakers may rescue ailing Spanish banks - both reviving hopes oil demand growth would recover.
Optimism that central banks from the United States to Europe may announce measures to prevent their economies from deteriorating further boosted broader markets, from Asian shares to base metals. Most assets are recovering from a plunge triggered by a series of weak numbers from China to the United States.
Brent crude had gained 19 cents to $100.83 a barrel by 0522 GMT, after rising as high as $101.18 earlier in the session and settling up $1.80 a barrel on Wednesday. US crude increased 40 cents to $85.42, gaining for a fourth straight day.
“There are expectations of further monetary easing from the United States and that is making people come back,” said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
“There are many, many factors still out there.
There is Greece, there is Europe. All this will keep oil very choppy for the time being.”
A crucial support for US crude is $85 a barrel and $100 for Brent, Emori said.
Brent fell below $100 for the first time since October on Friday, and prices are down more than 20 per cent from the 2012 high of $128.40 posted in March.
US crude has recovered from $81.21 touched on Monday, the lowest intraday price since Oct. 6. The contract is about 23 per cent below its 2012 high of $110.55, also struck in March.
Two influential Federal Reserve officials said they were prepared to take even more policy action to boost the erratic US economic recovery, and pointed to Europe's worsening debt crisis as the biggest threat to the world's largest economy.
Across the Atlantic, Germany and European Union officials were urgently exploring ways to rescue Spain's debt-stricken banks. Spain, the euro zone's fourth-biggest economy, said it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.
Oil is also supported due to lingering worries about supply disruption from the Middle East over Iran's nuclear programme.
The Islamic Republic questioned world powers' readiness for negotiations over its programme and accused the U.N. watchdog of behaving like a Western-manipulated intelligence agency, keeping up its sparring ahead of talks in Moscow.
“Iran could provide the upward pressure on oil prices and the downturn would weaken prices,” Daniel Yergin, chairman of IHS and author of The Prize, told Reuters. “We have seen tremendous volatility as the oil market waits for central bankers to come back to the rescue.”
Europe slowing down and uncertainty surrounding oil exports from Iran would be the two key factors influencing oil prices in the second half of the year, Yergin said.
Gains in oil, however, were capped by a smaller-than-expected drawdown in US crude stockpiles last week after 10 straight weeks of stock builds.
US crude inventories fell 111,000 barrels, less than the 500,000-barrel drawdown forecast in a Reuters poll, the Energy Information Administration said.
Crude stocks at the US delivery point in Cushing, Oklahoma, rose to a record.
“The price of oil has rebounded well from its June 1 lows. However, the price increase is just a flow through effect of the risk on mentality from investors,” Miguel Audencial, sales trader at CMC Markets, said in a report.
“Stockpiles are still at high levels and I can't see it trading above $90 in the near term unless there is an indication that demand will significantly increase,” he said, referring to US crude prices.
Brent is poised to retrace to $97.68 per barrel as a rebound from the June 4 low is approaching an end, while a rebound in US crude from $81.21 is over and the contract is expected to retrace to $83.31 per barrel, according to Reuters technical analyst Wang Tao.