London: Oil rose toward $100 a barrel on Wednesday, climbing along with other commodities and the euro as investors hoped a European Central Bank policy meeting later would steer the euro zone out of crisis.
Brent crude rose by $1.10 to $99.94 before easing back to $99.79 by 03:20 pm. US crude climbed 91 cents to $85.20.
“A slight brightening of sentiment on the financial markets and a weaker US dollar are putting wind in the sails of oil prices this morning,” said a Commerzbank research note.
Oil also found support from a larger-than-expected decline in US crude stocks. On Tuesday, the industry group American Petroleum Institute reported a 1.765 million barrel drop in inventories last week, more than triple the amount expected.
Weekly inventory data from the US Energy Information Administration, which typically carries more weight in the market than API estimates, will be released later on Wednesday.
Crude also got a lift from a pick-up in growth in the vast US services sector, a welcome relief after recent disappointing economic data.
Brent has struggled to recover from a near 25% drop in oil prices over the past three months as investors have yet to be convinced that European Union leaders can prevent a breakup of the single currency.
“We probably need to see a more significant rally out of this level to be more confident we have a corrective rally going on,” said Ric Spooner, chief market analyst at CMC Markets.
“We have gone from pricing in a potential supply shortage because of the situation in Iran ... to a market that is more than adequately supplied.”
The market will also closely monitor Wednesday’s meeting of the European Central Bank, widely seen as the only institution capable of immediate action on behalf of the euro zone.
The darkening outlook for the world economy has also sparked hopes the United States, the top oil-consuming nation, would introduce new stimulus measures to combat the gloom.
However, two top Federal Reserve officials suggested on Tuesday the US central bank was not ready to ease monetary policy at a meeting later this month as the economic outlook had not deteriorated to the point where action was warranted.