LONDON: Oil prices rose around $1 a barrel on Thursday on expectations Europe would take steps to support its banks and as economic and industry data suggested global growth may be slightly stronger than anticipated.
European Commission President Jose Manuel Barroso proposed a coordinated recapitalisation of banks to restore confidence, while the European Banking Authority said it was examining the resilience of lenders' capital positions.
Hopes for policy measures soon from politicians and central banks helped investors take a break from a recent sharp sell-off triggered by growing concerns about the damage to the banks from any Greek sovereign default.
The euro zone and UK central banks were both due to make interest rate announcements and their policy meetings were being watched for hints of future monetary easing.
Hopes of an early return of Libyan supplies to global markets after months of war looked misplaced after Italian oil major Eni said it feared its largest oilfield in the North African nation might be in ruins.
Also supportive were data showing US crude and gasoline inventories fell last week instead of rising as forecast, while distillates stocks dropped more than expected.
Brent crude futures for November were up 60 cents at $103.33 by 1033 GMT, adding to a gain of nearly 3 percent on Wednesday. US crude, which jumped more than 5 percent on Wednesday, was up $1.12 at $80.80 a barrel.
"Stock markets are up, there was a surprisingly large drop in US oil inventories and the market is coming back after recent falls," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
"I think we might be able to see Brent trading around $100 for a while unless there is another sharp deterioration in the economic outlook," Fritsch added.
World stocks rose for a second day on Thursday with the MSCI world equity index up 1.3 percent, having hit a 15-month low earlier this week. The index is around 6 percent above this low.
RESISTANCE
Crude stocks dropped 4.68 million barrels to 336.28 million barrels in the week to Sept. 30, the US Energy Information Administration said in a report on Wednesday, beating analysts' expectations for a 1.9 million barrel build.
Gasoline stocks fell an unexpected 1.14 million barrels, while distillates slipped 744,00 barrels, the EIA said.
Italian oil major Eni's largest oilfield in Libya, known as Elephant, may be in ruins, its operations manager, Mustafa Abougfeefa, said in an interview. The oil field pumped 130,000 barrel per day before the war.
"We cannot promise the field will start producing before the end of the year. Gaddafi's militia destroyed everything," Abougfeefa said.
Global oil prices below $90 a barrel would be difficult to accept, Iraq's Deputy Prime Minister for energy Hussain al-Shahristani has told Reuters, in a sign a slide in prices is starting to worry some members of oil cartel the Organization of the Petroleum Exporting Countries (OPEC).
Shahristani added that he saw no need for OPEC to review its crude output at its next meeting in December and no reason now to trim production.
Still, volatility in oil prices will remain as investors take positions based on the economic outlook for the western hemisphere, analysts said.
US initial jobless claims later on Thursday will be the next clue to how the world's largest economy is doing. The market will also focus on non-farm payrolls data due on Friday.
Copyright Reuters, 2011
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