London: Brent crude bounced back above $101 on Wednesday, snapping a three-day losing streak, as nervous investors were reassured by European finance ministers agreeing to safeguard their banks.
The price was also supported after the Federal Reserve promised to launch more measures to help the fragile US economy, and from an unexpected fall in US crude stockpiles.
Brent crude rose $1.42 to $101.21 a barrel by 04:00 pm, after touching a peak of $102.18.
The contract fell on Tuesday into bear market territory, defined as a 20% drop from recent highs, after closing at $99.79 a barrel -- its lowest settlement since February.
US crude was up $2.00 at $77.67 a barrel, after reaching an intraday high of $78.46.
However analysts remained downbeat on the prospects for oil and other commodity prices with anxiety about the state of euro zone finances and the outlook for demand prevailing.
“I’m not sure this is the end of the bear trend, this is a short term bounce, but until there is actual doing as well as comments, we won’t see a sustainable recovery,” said Andy Sommer analyst at EGL in Dietikon, Switzerland.
Global oil prices below $90 a barrel would be “difficult” to accept, Iraq’s Deputy Prime Minister for energy told Reuters on Wednesday, in a sign that a slide in prices is starting to worry some Opec members.
Iraq’s Hussain al-Shahristani also told Reuters he saw no need for the Organization of the Petroleum Exporting Countries to review its crude output at its next meeting and no reason at the current time to trim production.
An official from Iran raised the possibility of Opec holding an emergency meeting, with its Opec governor saying it would be a “natural” thing to do if prices continue to fall.
Highlighting weakness in the global economy business activity in Germany’s services sector contracted for the first time in more than two years in September.
European finance ministers agreed on Tuesday to safeguard their banks as doubts grew about whether a planned second bailout package for debt-laden Greece would go ahead.
Technically, Brent is expected to revisit the previous trading session’s low of $99.11 per barrel, while US crude is likely to retest the $75.68-$75.71 levels, said Reuters market analyst Wang Tao.
US commercial crude stocks fell unexpectedly last week as imports dropped, and oil product inventories also declined, oil trade group American Petroleum Institute said.
Crude stocks in the United States fell 3.1 million barrels in the week to 30 September, API said. Analysts polled by Reuters had projected, on average, a 1.9 million barrel rise.
The US Energy Information Administration will release its weekly data later on Wednesday.
“The market will be looking to official inventory data for some direction, but macroeconomic worries regarding Europe will continue to drive sentiment this week,” ANZ bank said in a research note.