Singapore: Brent crude rose for a sixth straight session on Tuesday, buoyed by a landmark bank merger deal in Greece and strong data from the United States that allayed fears the world’s top oil consumer was sliding back into recession.
Oil prices were also supported by a rally in stock markets with money switching back to riskier assets after U.S. data showed consumer spending in the world’s largest economy rose at its fastest pace in five months in July.
Brent October crude was up 13 cents to $112.01 a barrel by 6:2am.
US October crude rose 10 cents to $87.37 a barrel, having reached $87.72, highest intraday price since 17 August.
Brent’s premium to US crude was at $24.75 a barrel, well off its record $26.69 on 19 August.
“Investors are expecting more monetary easing policies from the US and that’s why money is coming back into equities,” said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
“As long as equities are improving, oil will be in a better shape.”
In Europe, a merger between two Greek banks gave a much needed capital boost to a sector battered by the country’s severe debt crisis that has threatened to spread through the euro zone.
The merger “is good news psychologically, but it does not have a major impact to the oil market as Greece is not a big oil consumer,” Emori said.
The dollar index was down slightly on Tuesday as investors moved away from safe havens to riskier assets. A weaker greenback makes dollar-denominated oil more attractive to holders of other currencies.
Markets were also keeping an eye on US crude inventory, which likely rose last week on continued inflows from the Strategic Petroleum Reserve and evacuations forced by Hurricane Irene, a preliminary Reuters poll showed.
Analysts expect crude inventories in the week to 26 August to rise by 1.2 million barrels while gasoline stocks may have dropped by 1.4 million barrels and distillate stockpiles are expected to have risen 1.1 million barrels.
US refiners and energy companies on Monday began to restore operations disrupted by Hurricane Irene over the weekend. One refinery was heard to have suffered damage to a crude unit due to flooding, while another remained shut.
“Oil markets need to see better fundamentals, otherwise it’s difficult (for Nymex) to break $100,” Emori said, adding that the contract could stay rangebound between $80 and $100 a barrel.
Italy’s Eni SpA signed a deal with Libya’s rebel government on Monday aimed at quickly restarting its oil and gas operations in the country following concerns it could lose its dominant position to rivals.
A spokesman for Libya’s Arabian Gulf Oil Company (AGOCO) told Reuters earlier that it plans to restart production at two eastern oil fields in mid-September and resume shipping oil from Tobruk by the end of the same month.
“Prices could also soften with the reinstatement of Libya’s new government after the downfall of Gaddafi’s regime and announcements they would restart production at two eastern oil fields in mid-September and resume shipping oil by the end of the month,” ANZ analysts said in a note.
“But with the focus on risks to global growth, oil prices are likely to be led by moves in financial markets.”
Speculators cut their net long positions in Brent crude oil but raised slightly their long exposure to gasoil in the week to 23 August data published by the IntercontinentalExchange showed.