Singapore: Brent crude steadied on Wednesday, near $109 a barrel, on growing optimism that the debt crisis in Greece will be resolved, avoiding a contagion in Europe.
US crude held near $93 after industry data showed tighter supply at the world’s largest oil consumer.
ICE Brent crude for August rose 23 cents to $109.01 a barrel by 10:07AM, August crude was down 2 cents to $92.87 a barrel. Both contracts rose more than 2% on Tuesday.
“Any positive compromise within Europe, with Greece willing to make some sacrifices, will cause the euro and oil to rally,” said Jeremy Friesen, a commodity strategist at Societe Generale.
Growing market confidence that the Greek parliament will approve the austerity programme, and that a French plan to rollover Greek sovereign bonds will help avert a default, lifted Asian stocks and the euro.
Greek lawmakers will vote Wednesday and Thursday on a five-year package of spending cuts, tax increases and privatisation in order to secure the next 12 billion euro slice of aid in July.
Brent’s premium to US light sweet crude narrowed to $15 a barrel after rising above $17 on Tuesday.
“Investors are taking profits after big gains last night,” Tetsu Emori, commodities fund manager at Astmax Investments in Tokyo, adding that once Brent breaks a short-term resistance at $110 a barrel, $115 should be easy to reach.
US CRUDE STOCKS
Oil also gained support after industry data showed a larger-than-expected drop in crude stocks and a surprise fall gasoline inventories.
Investors are looking to government data due later on Wednesday for confirmation that oil supply is tightening in the United States.
Yet, concerns about the release of emergency stocks from consumer countries, that caused oil to tumble 7 percent last week, hovered.
“There is still some heaviness in the market in relation to the increase in supply from strategic reserves,” Societe Generale’s Frissen said.
“The increase in reserves is mostly coming from the United States, which is the most oversupplied market in the world right now.”
The country is expected to move away from global fundamentals where supply is expected to tighten in the second half of the year on strong demand, he said.