LONDON: Brent crude oil rose towards $109 per barrel on Thursday as expectations Spain would seek a bailout and better US data encouraged investors back into riskier assets such as oil and commodities.
Stock markets and the euro rallied on Thursday ahead of a European Central Bank policy meeting which is likely to keep rates unchanged and US jobs figures that were expected to show the world's biggest economy recovering slowly.
The euro rose to a two-week high against the yen, gold gained for a fourth day and copper rallied in what traders described as a general return to risk appetite.
Brent crude for November was up 70 cents per barrel at $108.87 by 0830 GMT. The contract fell to an intra-day floor of $107.67 on Wednesday, the lowest since Sept. 20.
US light crude oil for November rose 50 cents to $88.64 a barrel, after dropping to its lowest since Aug. 3 in the previous session.
On Wednesday, Brent dropped 3 percent and US crude lost 4 percent as fears a delayed recovery in China and recession in the euro zone would limit energy demand.
"There was no really convincing explanation for the fall in price yesterday," said Carsten Fritsch, analyst at Commerzbank. "We are seeing a counter-movement, a slight counter-movement, after the exaggerated decline in price."
Even as economic worries in Europe and China keep investors jittery, data from the US is offering hope, with private employers adding more jobs than expected in September and new orders helping a pick-up in the service sector.
This data preceded widely followed jobs numbers from the US Labor Department on Friday, which are expected to show a slight improvement from the previous month.
Employers are expected to have added 113,000 jobs to their payrolls, an increase from 96,000 in August, with the unemployment rate edging up by a tenth of a percentage point to 8.2 percent, according to a Reuters survey.
Also supporting crude, US inventory levels unexpectedly dropped last week despite an increase in imports. Crude stocks fell by 482,000 barrels, compared with expectations for a 1.5 million-barrel increase.
In Europe, policymakers at the ECB may hold interest rates steady at Thursday's meeting to allow time for new details on the health of the euro zone economy and for Spain to ask for aid.
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