SINGAPORE: Brent crude rose above $112 on Wednesday as the dollar weakened and a slew of positive economic indicators, from China to the United States, eased demand concerns triggered by the debt crisis in Europe.
Asian shares, the euro and base metals held steady after the positive data, although market participants have now shifted focus to Europe with Portugal testing investor confidence in a debt sale, and as talks of a default by Greece resurface.
Front-month Brent crude rose 51 cents to $112.04 a barrel by 0256 GMT, after touching an intraday peak in the previous session that was above the contract's 200-day moving average of $112.45. US oil gained 61 cents $101.32.
"Oil markets are still rallying on positive data, particularly from China, and expectations of more easing by the country to ensure steady growth," said Natalie Robertson, an analyst at ANZ. "Eyes are also on Europe as talks of a Greek default return. That's a factor weighing on markets."
Data from China show new home prices fell in December from November, declining for the third straight month, while the economy grew at 8.9 percent in the fourth quarter of 2011, the weakest pace in 2-1/2 years.
The slowing growth in the GDP data boosted hopes China might revive monetary easing to limit the deceleration.
The dollar index fell 0.27 percent, sliding as investors purchased riskier assets after sentiment improved.
Greece goes head to head with its creditors later in the day in a renewed attempt to break a deadlock in negotiations to slash the country's debt and stave off default.
International private sector creditors represented by the Institute of International Finance (IIF) were set to meet the government in the afternoon.
STOCKPILES
Another factor weighing on prices is expectations of a build up in crude stockpiles in the United States for the fourth straight week on strong imports.
On average, domestic crude inventories were forecast up 2.8 million barrels, according to the poll of six analysts, who all predicted builds for the week to Jan. 13.
Data will be delayed by a day this week due to a holiday in the United States on Monday, with the American Petroleum Institute numbers due later in the day followed by the US Energy Information Agency on Thursday.
Brent oil is neutral in a range of $110.56-$112.76 per barrel, while US oil may end the current rebound below $102.31 per barrel, according to Reuters market analyst Wang Tao.
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