Oil prices rose to near $104 a barrel Tuesday in Asia after strong demand for Spanish debt in a sale of 12- and 18-month notes eased some fears that Europe’s debt crisis could soon flare again.
Benchmark oil for May delivery was up 82 cents to $103.75 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 10 cents to settle at $102.93 in New York on Monday.
Brent crude for June delivery was down 23 cents at $118.45 per barrel in London.
Spain sold 3.2 billion euros ($4.2 billion) of 12- and 18-month bonds at an auction Tuesday, exceeding the government’s target amount. However, yields on the debt rose sharply, suggesting investors are still concerned about the country’s finances.
Stock markets, which oil traders often look to as a measure of overall investor sentiment, rose Tuesday in Europe.
Most analysts are forecasting a mild recession in Europe this year, but renewed contagion from the continent’s debt crisis could further hurt economic growth.
“Economic conditions in the big developed economies remain weak and there is potential for further downward revisions to crude oil demand,” National Australia Bank said in a report.
Investors are also mulling the impact of meetings last weekend about Iran’s nuclear program. Talks among Iran and six world powers didn’t produce any concrete agreements, but negotiators said the tone was better than previous meetings, and the sides agreed to meet again on May 23.
Concern that a military strike by Israel and the U.S. against Iran’s nuclear facilities would disrupt global crude supplies has helped push crude up from $75 in October. Iranian crude output has fallen in recent months as the U.S. and Europe begin to impose economic sanctions on OPEC’s second-biggest producer.
“While the recent Iran talks were ‘constructive’, they did not offer much in the way of providing markets with any sense of supply certainty,” NAB said.
In other energy trading, heating oil was up 1.2 cents at $3.13 per gallon and gasoline futures gained 0.5 cents at $3.27 per gallon. Natural gas fell 0.7 cents at $2.01 per 1,000 cubic feet.