Wednesday, 06 February 2013 00:26
NEW YORK: Oil prices resumed their three-week rally on Tuesday, boosted by positive economic data in Europe that reignited the upward momentum in stock markets.
Economic news was positive as purchasing managers' indices in Europe and data on the US services sector underscored investor optimism.
"The S&P 500 has recovered its confidence and there's support for oil prices related to that," said Timothy Evans, energy analyst for Citi Futures Perspective in New York.
Brent's premium to US crude increased to $20.10 in early US trading, the widest this year.
Expectations that stocks at the Cushing, Oklahoma, delivery point for the US contract may keep rising are weighing on the US benchmark, traders have said.
News that the Magellan Midstream Partners LP's reversed Longhorn Pipeline would begin filling with crude in mid-March and reach its 225,000-barrel-per-day capacity in the third quarter had little effect on sentiment for West Texas Intermediate crude.
Supply of the four North Sea crude oil grades that underpin the Brent futures contract is expected to fall in March, according to loading schedules, supporting Brent prices.
Brent crude was up $1.32 a barrel at $116.92 at 11:05 a.m. EST (1605 GMT) after falling as low as $115.01 and climbing as high as $117.03 earlier. It has gained over 5 percent in 2013 and reached a more than four-month high above $117 on Friday. US crude added 63 cents to $96.80.
Oil traders awaited a report on US oil supplies late on Tuesday. US crude stocks are expected to rise by 2.8 million barrels, a preliminary Reuters poll found on Monday.
The American Petroleum Institute, an industry group, is expected to release the report on Tuesday, while figures from the government's Energy Information Administration are due to follow on Wednesday.
Traders largely ignored news of Iran's offer of fresh talks with the West over its nuclear program.
Iran and world powers announced on Tuesday new talks were scheduled for Feb. 26, but hopes for progress were limited by comments from an Iranian official suggesting the West's goal in talking was to undermine the Islamic republic.
Copyright Reuters, 2013