Gains capped by data pointing to slower growth and fuel demand in major economies
Brent crude rose towards $101 a barrel on Wednesday, drawing support from strong equity markets, but gains were capped by data pointing to slower growth and fuel demand in major economies.
The North Sea benchmark ended above $100 a barrel for a second straight day on Tuesday, tracking share markets on a view that central banks could intensify efforts to revive a flagging global recovery.
"It's an unusual situation in that bad economic news is good news for markets because it implies more easing by the central banks," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
"Crude oil is going along with the equity rally, but it will need the support of gasoline which is lagging behind."
Brent futures were up 33 cents at $100.64 a barrel by 1258 GMT, down from a session high of $101.22. US oil gained 24 cents to $89.42.
Oil's gains were kept in check by gloomy economic data in big consumers. Growth in Chinese factories slowed to a crawl as export demand dwindled, while Germany, the euro zone's largest economy, saw business activity decline for the first time in five months.
The prospect of a slowing global economy dampening oil demand growth has already shaved $10 off the price of Brent since the start of April. And uncertainty over global growth may result in commodities facing increased volatility.
"We continue to view recent weakness in the dataflow as consolidation, rather than the start of a 2012-style capitulation, but remain watchful of the loss of momentum in the manufacturing sector from these key countries," analysts from ANZ bank said in a note.
In the United States, crude stocks fell last week as imports dropped while refined fuel inventories were mixed, data from industry group the American Petroleum Institute (API) showed late on Tuesday.
API's data showed that crude inventories fell by 845,000 barrels in the week to April 19, compared with analysts' expectations for an increase of 1.5 million barrels.
US government data, expected at 1430 GMT, will shed more outlook on the appetite for oil.