LONDON: Brent crude held near six-month highs above $117 on Thursday amid worries of further supply disruptions due to tension in the Middle East, while hopes Greece is inching closer to a debt deal and expectations of further easing from the ECB gave support.
Front-month Brent gained 61 cents to $117.81 a barrel by 1014 GMT, rising for an eighth straight day. US crude added 52cents to reach $99.23 a barrel in its third day of increases.
"Instability in the (Middle East) region would see choppy Brent trading through 2012 as supply side fears continue to grab investors' attention," Andrey Kryuchenkov from VTB Capital said in a note.
"Importantly though, it is exactly supply fears that underpin prices while the actual output impact from these events has been largely mitigated for now".
Analysts said that away from geopolitical worries, further injections of long-term liquidity into European banking are helping assuage fears about the sector and stimulating speculative positioning on crude contracts.
"Monetary excess liquidity has been easing financial distress in the European banking sector, so we won't have a banking crisis this year while interest rates have been dropping for Italy and Spain," DnB NOR oil analyst Torbjorn Kjus said. "This is making it easier for speculative money to build up positions in crude".
All eyes will be on what the European Central Bank is willing to do to help Greece when it holds its monthly policy meeting on Thursday, with interest rates expected to stay on hold ahead of a major funding operation later this month.
Investors expect Europe to approve a plan to resolve Greece's debt crisis even as leaders in Athens stopped short of agreeing on the austerity measures.
Meanwhile, Middle East tensions escalated as armoured reinforcements poured into the Syrian city of Homs and Iran renewed a threat against the United States.
Brent's premium against US crude was around $18 on Thursday. It touched an intraday high of $20.71 on Tuesday, the widest since October.
CHINESE INFLATION, DEMAND OUTLOOK
Overnight data from China showed inflation fighting will remain a key topic this year for the world's second largest oil consumer, after the inflation rate accelerated to 4.5 percent in January, ahead of market expectations.
Investors also await forecasts for global oil demand from the Organization of Petroleum Exporting Countries due later in the day and from the International Energy Agency on Friday.
The US EIA this week raised its 2012 and 2013 forecast for global oil demand growth and said supply would tighten as gains in non-OPEC output lag, adding support to oil futures.