LONDON: Brent crude oil rose to $107 a barrel on Tuesday as the steepest fall in three weeks prompted buying, but concerns over turmoil in emerging markets and a slowdown in China kept gains in check.
Oil also drew support from expectations of a steep fall in US distillate inventories as consumers burn heating oil during the bitter northern hemisphere winter.
That helped support oil despite weakness in Asian shares, which remained near five-months lows. Brent crude touched a high of $107.38 a barrel and was up 50 cents at $107.19 by 0935 GMT. Brent fell $1.19 on Monday, its biggest decline since Jan. 2.
US oil gained 45 cents to $96.47.
"The recovery in oil is a knee-jerk reaction to the steep fall in prices we saw overnight," said Jonathan Barratt, chief executive of commodity research firm Barratt's Bulletin.
"The outlook is weak as some of the numbers out there, particularly from China, are a bit of a concern."
China's factory activity may have cooled in January to a six-month low, a Reuters poll showed, underscoring views that a slowdown in the world's second-largest economy has continued into the beginning of 2014.
In the middle of the US winter, a forecast fall in distillate inventories is overshadowing a likely rise in crude stockpiles in the world's top oil consumer.
A Reuters survey of analysts, taken ahead of inventory reports for last week from the American Petroleum Institute and the US Energy Information Administration, revealed expectations that distillate stocks, including heating oil and diesel fuel, decreased 2.4 million barrels on average.
US crude stock may have risen about 2.7 million barrels in the week ended Jan. 24, the survey also indicated, gaining for a second straight week.
Investors are awaiting the outcome of a US Federal Reserve policy meeting, when the central bank is expected to scale back its monthly bond buying further.
A rollback will support the dollar, weighing on commodities priced in the currency.
Comments
Comments are closed for this article.