SINGAPORE: Brent crude climbed toward $115 a barrel on Thursday as rising tensions in the Middle East stoked supply fears, keeping prices less than a dollar away from their highest in almost a month, although forecasts of lower demand capped gains.
November Brent crude rose 52 cents to $114.85 a barrel by 0501 GMT after a volatile session on Wednesday that saw the contract rising to $115.59, its highest since Sept. 17, before settling down slightly.
US crude edged up 33 cents to $91.58 after dropping more than 1 percent in the previous session. A larger-than-expected rise in US crude inventories weighed on prices.
"There's been fairly large price swings sideways for the past two weeks or so," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.
"We have a very weak economy so there are worries about oil demand growth, while geopolitical issues keep the market supported."
Shelling along the Turkey-Syria border and continued hostility between Iran and the West over Tehran's disputed nuclear programme have reinforced fears about potential threats to oil supplies from the Middle East Gulf.
"Geopolitical issues are going to keep prices on a boil in Q4," Nunan said, adding that this and maintenance at the North Sea Forties oil field would maintain a wide gap between the two oil benchmarks.
Brent's premium to West Texas Intermediate (WTI) crude has risen to more than $23, its widest since October 2011.
Yet forecasts of slower economic and fuel demand growth in the world were keeping oil prices from rising further.
Global oil demand is looking weaker than previously forecast as the slowing economy continues to weigh on consumption, the US government and the Organization of the Petroleum Exporting Countries said in their monthly report.
The US Energy Information Administration (EIA) and OPEC cut on Wednesday their forecasts for growth in world oil demand in 2013, a day after the IMF cut its economic growth forecasts for the second time since April.
China's annual economic growth probably slowed for a seventh straight quarter in the July-September period to the weakest level since the depths of the global financial crisis, a Reuters poll showed.
"It seems like it's going to be a long hard slog in this economic malaise," Nunan said.
"Seasonally we should get stronger demand in Q4 but the caveat is, if the whole economy falls apart, it doesn't matter."
The EIA and OPEC reports are two of three major oil outlooks due out this week, with the International Energy Agency set to release its October oil markets outlook on Friday.
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