LONDON: Brent crude oil rose on Wednesday, lifted by a German court decision backing a euro zone bailout fund, hopes the Federal Reserve will ease monetary policy and on growing geopolitical risk after militants killed the US ambassador to Libya.
Brent crude for October delivery, which expires on Thursday, rose for a fifth straight session, gaining 60 cents to reach $116.00 a barrel by 1350 GMT.
It earlier hit $116.67, its highest point since Aug 16. Germany's Constitutional Court said on Wednesday the country could ratify the euro zone's new rescue fund and budget pact as long as it could guarantee there would be no increase in German financial exposure to the bailout fund without parliament's approval.
"I think it should be seen as a positive step in the long road to solving the eurozone debt crisis. I think markets will be relatively pleased with the announcement, and the conditions put in place," said Henk Potts, market analyst at Barclays Wealth.
A two-day US Federal Reserve policy meeting starts on Wednesday. Markets widely expect some type of new monetary stimulus to boost the US economy, helping to brighten a gloomy demand outlook.
US crude was up 21 cents at $97.38, pressured by some concern that a report from the Energy Information Administration could point to a build after the American Petroleum Institute saw reserves rise against expectations .
The API data will be followed by the more closely watched numbers from the US Energy Department due at 1430 GMT.
LIBYA KILLING
Geopolitical risk, which has been supporting oil since tension between Iran and Israel escalated earlier this year, came back into focus on news the US ambassador to Libya and three other embassy staff had been killed by militants in a rocket attack.
Global oil demand is poised to be depressed for the next 18 months while supply levels from OPEC countries are at fairly comfortable levels, the West's energy agency, the IEA said.
The IEA said it made no significant changes to its global oil demand outlook and forecast demand would grow at a steady rate of around 0.8 million barrels per day (bpd) or 0.9 percent in both 2012 and 2013.
Some analysts said the oil demand outlook would probably be marked down by the IEA in the future.
"With prices this high, it's going to be an issue for developed and emerging markets where governments will need to adjust domestic prices. This is not factored into the report yet.
They tend to revise demand lower much later," said Olivier Jakob, at Petromatrix in Zug, Switzerland.
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