SINGAPORE: Brent crude rose above $113 a barrel for the second consecutive day on Wednesday, boosted by expectations of lower US crude stockpiles after a storm disrupted production in the Gulf of Mexico.
Tropical Storm Lee, which made landfall over the weekend, was also expected to have disrupted imports, adding to the impact of Hurricane Irene, which forced the closure of several oil hubs on the US East Coast the previous weekend.
Front-month Brent gained 45 cents to $113.34 a barrel by 0555 GMT, after settling up $2.81 on Tuesday. US crude was trading at $86.46 a barrel, up 43 cents.
"The disruption to Gulf production is supporting prices, and with storms coming more often to the United States, it could be a bullish factor until the end of hurricane season," said Tetsu Emori, a fund manager at Astramax Co. Ltd. in Tokyo.
More than half of US Gulf oil production remained shut as of Tuesday in the wake of Tropical Storm Lee, which dissipated on Monday, although its after-effects have delayed a swifter restart.
A broad area of low pressure located over the southern Gulf of Mexico has a medium 40 percent chance of becoming a tropical cyclone in the next 48 hours, the US National Hurricane Center forecast.
Brent crude could rise towards $115.36, while US oil is expected to revisit the Sept 1 high of $89.90, Reuters market analyst Wang Tao says.
To help ease the fears of oil demand falling in the world's biggest energy consumer, market participants are betting that US President Barack Obama may announce new stimulus measures to boost the flagging US economy.
Obama is expected to unveil a $300 billion package to create new jobs in an address to Congress on Thursday, CNN reported, citing Democratic sources.
Fears of a sharp slowdown in China eased after an influential government economist said the world's second-biggest energy consumer would be able to achieve a soft landing for its economy.
European stocks were poised to follow Asian shares higher on Wednesday as investors hunted for bargains, while the euro edged up against the dollar as traders covered some bets against the common currency following a sharp overnight fall.
The weaker dollar, which fell 0.5 percent against a basket of currencies, helped boost dollar-denominated oil by making it cheaper when purchased in other currencies.
The WTI/Brent spread was steady at $26.82 a barrel, after hitting a record above $27 in intraday trade on Tuesday as Brent crude strengthened on tight North Sea supplies and data showing strong growth in the US services sector in August.
Copyright Reuters, 2011
Comments
Comments are closed for this article.