London: Prices climbed on 12 December ahead of an expected cut to US interest rates which could support demand for energy and as the market tracked supply concerns, dealers said.
They said weather problems in the US and news of a major bomb attack in Algeria also provided some support for prices in a market which has recently lost considerable ground.
New York’s main contract, light sweet crude for January delivery, gained 34 cents to $88.20 per barrel.
Brent North Sea crude for January delivery rose 27 cents to $88.31.
“All eyes will be on the Fed interest rate decision,” Sucden oil analyst Michael Davies said in London. Another quarter-point cut to US borrowing costs, this time to 4.25 per cent, was seen as a done deal by markets.
“I think we can expect quite a bit of volatility (for oil prices) this week,” said Victor Shum, of Purvin and Gertz international energy consultants in Singapore.
Concerns about US economic growth have weighed heavily on oil prices in recent weeks.
After a run-up to record highs of close to $100 in late November, prices have fallen back on concerns a sharp slowdown in the US, the world’s biggest consumer, could dampen demand.
“I think the bullish froth has been taken out of the crude oil futures market,” Shum said.
Highlighting the negative tone was the fact that OPEC’s decision last week to leave its daily output quota unchanged at 27.25 million barrels failed to spark a rally, the analyst noted.