Brent rises above $107 on economy recovery hopes

Brent rises above $107 on economy recovery hopes

Singapore: Brent crude futures rose above $107 on Wednesday after upbeat US data pointed to a recovery in demand growth in the world’s biggest oil consumer.

Brent crude rose 52 cents to $107.25, posting gains for the third consecutive day, after settling $3.09 higher, its biggest one-day percentage increase since 14 October. US crude gained 80 cents to $98.04 a barrel, after rising more than a $1 to $98.44 earlier.

“There are two main things about that are solid indicators of a revival in the United States. One is employment and the other housing," said Tony Nunan, a risk manager at Mitsubishi Corp.

“We have got some positive numbers on housing. Added to that is the geopolitical uncertainty in the Middle East. You have Iran, you have Syria."

US housing starts and building permits jumped to a 1-1/2 year high in November as demand for rental apartments rose, suggesting the housing market was entering a tentative recovery.

Tuesday’s data, which also showed gains in groundbreaking for single-family homes, was the latest sign of a quickening of an economic recovery.

On the other side of the Atlantic, hopes of Europe containing its debt crisis revived as German business sentiment rose sharply in December, defying expectations for a decline.

The rise underscored the strength of Europe’s largest economy in the face of a sovereign debt crisis that has hammered growth in other euro zone members.

“The US data and the latest indications from Europe seem to suggest that the EU crisis can be contrained, and that it will not spread further," said Nunan.

Oil also got support from an industry report that showed crude stocks in the United States fell nearly double than what was expected. The industry group American Petroleum Institute said domestic stocks fell 4.6 million barrels compared with expectations of a drop of 2.3 million barrels.