Brent up near $112 on better global economic outlook

Brent crude edged up near US$112 a barrel on Tuesday as Japan expected to pump in money to boost economy
By Reuters
Tue 22 Jan 2013 09:00 AM

Brent crude edged up near US$112 a barrel on Tuesday as Japan was expected to pump in more money to boost its economy, adding to positive growth signals from the United States and China in past weeks.

The Bank of Japan is set to announce on Tuesday a pledge by the new government to pursue aggressive monetary easing to achieve inflation and boost consumer demand. China is on track to recover from its longest growth slowdown since the global financial crisis while economic data from the United States has improved.

Brent crude for March delivery edged up 22 cents to US$111.93 a barrel by 0325 GMT while February US crude was down 1 cents to US$95.55.

"A stronger Japan is good for the global economy," Jeremy Friesen, a commodities strategist at Societe Generale in Hong Kong, said.

The stimulus plan will be more positive for base metals than energy as Japan will be building infrastructure that will increase demand for metals such as zinc and copper, he said.

"Japan's energy demand will depend on what they do with the nukes and infrastructure that could create more energy efficiency."

A broader economic optimism in global markets and worries about supply disruption in the Middle East and North Africa have lifted oil prices at the start of the year although investors tread cautiously as a deadline to settle US debts draws near.

"The bigger risk is the focus on the US debt ceiling that will come to a head in the next few weeks," Friesen said.

"Obama seems to have some momentum behind him while the Republicans look fatigued."

A confident President Barack Obama kicked off his second term on Monday with an impassioned call for a more inclusive America.

In Algeria, its prime minister accused a Canadian of coordinating last week's raid on a desert gas plant where 38 mostly foreign hostages were killed and he pledged to resist the rise of Islamists in the Sahara.

But investment in the country's oil and gas sector may fall as concerns about the costs of security after the bloody siege eclipsed the impact of a hydrocarbon law designed to win over foreign firms, executives and analysts said.

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