Prices were also supported by rally in stock markets with money switching back to riskier assets
Brent crude rose for a sixth straight session on Tuesday, buoyed by strong
data from the United States that allayed fears the world's top oil consumer was
sliding back into recession and a landmark bank merger deal in Greece.
Oil prices were also supported by a rally in stock markets with money
switching back to riskier assets after US data showed consumer spending in the
world's largest economy rose at its fastest pace in five months in July.
Brent October crude was up 45 cents to $112.33 a barrel by 0216 GMT.
US October crude rose 41 cents to $87.68 a barrel, having reached $87.72,
highest intraday price since August 17. Brent's premium to US crude was at
$24.73 a barrel, well off its record $26.69 on August 19.
"Investors are expecting more monetary easing policies from the US and
that's why money is coming back into equities," said Tetsu Emori, a
Tokyo-based commodities fund manager at Astmax Investments.
"As long as equities are improving, oil will be in a better
In Europe, a merger between two Greek banks gave a much needed capital boost
to a sector battered by the country's severe debt crisis that has threatened to
spread through the euro zone.
The merger "is good news psychologically, but it does not have a major
impact to the oil market as Greece is not a big oil consumer," Emori said.
The dollar index was down slightly on Tuesday as investors moved away from
safe havens to riskier assets. A weaker greenback makes dollar-denominated oil
more attractive to holders of other currencies.
Markets were also keeping an eye on US crude inventory, which likely rose
last week on continued inflows from the Strategic Petroleum Reserve and
evacuations forced by Hurricane Irene, a preliminary Reuters poll showed.
Analysts expect crude inventories in the week to August 26 to rise by 1.2
million barrels while gasoline stocks may have dropped by 1.4 million barrels
and distillate stockpiles are expected to have risen 1.1 million barrels.
US refiners and energy companies on Monday began to restore operations disrupted
by Hurricane Irene over the weekend. One refinery was heard to have suffered
damage to a crude unit due to flooding, while another remained shut.
"Oil markets need to see better fundamentals, otherwise it's difficult
(for Nymex) to break $100," Emori said, adding that the contract could
stay rangebound between $80 and $100 a barrel.
Italy's Eni SpA signed a deal with Libya's rebel government on Monday aimed
at quickly restarting its oil and gas operations in the country following
concerns it could lose its dominant position to rivals.
A spokesman for Libya's Arabian Gulf Oil Company (AGOCO) said earlier that
it plans to restart production at two eastern oil fields in mid-September and
resume shipping oil from Tobruk by the end of the same month.
"Prices could also soften with the reinstatement of Libya's new
government after the downfall of Gaddafi's regime and announcements they would
restart production at two eastern oil fields in mid-September and resume
shipping oil by the end of the month," ANZ analysts said in a note.
"But with the focus on risks to global growth, oil prices are likely to
be led by moves in financial markets."
Speculators cut their net long positions in Brent crude oil but raised
slightly their long exposure to gasoil in the week to August 23, data published
by the IntercontinentalExchange showed.