Expectations Europe's financial crisis is on the mend renewed hopes of a revival in oil demand
Brent futures held steady near $114 on Tuesday as expectations Europe's financial crisis is on the mend renewed hopes of a revival in oil demand growth, while simmering tension in the Middle East provided additional support.
Asian shares, the euro, base metals and gold all rose after Moody's Investors Service affirmed its investment grade rating on Spain, helping ease investor worries of a worsening crisis in the region. Oil was also supported by supply concerns as the European Union slapped fresh sanctions on Iran.
Brent slipped 12 cents to $113.88 a barrel by 0432 GMT. The November contract, which expired on Tuesday, went off the board 73 cents lower at $115.07, while the December one settled 40 cents lower at $114.00. U.S. oil gained 18 cents to $92.27.
"We are seeing prices react to the investment grade news for Spain, but the demand outlook continues to look weak because of the global economic condition," said Victor Shum, managing director at IHS Purvin and Gertz in Singapore. "Prices are drawing support from supply concerns in the Middle East."
European Union governments imposed sanctions against major Iranian state companies in the oil and gas industry and strengthened restrictions on the central bank.
More than 30 firms and institutions were listed in the EU's Official Journal as targets for asset freezes in the EU, including the National Iranian Oil Company (NIOC), a large crude exporter, and the National Iranian Tanker Company (NITC).
The United States and the European Union are putting pressure on Iran to stop its disputed nuclear programme, while Tehran says it needs the technology to generate electricity.
Still, prices were under pressure from data showing U.S. crude inventories rose more than expected last week, while distillate stockpiles showed a surprise build, data from the American Petroleum Institute showed.
Crude inventories rose by 3.7 million barrels in the week to Oct. 12, led by a 2 million build in the U.S. Gulf Coast. Analysts polled by Reuters had forecast a build of 1.7 million barrels in total U.S. crude inventories for the week.
Brent is likely to drop to $112.94 per barrel, a break below which will lead to a further loss to $111.94, while U.S. oil may keep rising towards $94.06 per barrel, according to Reuters technical analyst Wang Tao.