Brent crude rose on Wednesday, staying above $109 a barrel as a larger-than-expected drawdown in US gasoline stocks last week trumped ongoing concerns over the euro zone debt crisis.Brent crude for October rose as much as $109.62 a barrel, and traded 30 cents higher at $109.43 by 0328 GMT. US crude was up 48 cents at $87.13 a barrel, after slipping $1.23 to settle at $86.65.In Europe, a meeting between French and German leaders didn't result in any concrete measures to try and find a way out of the region's sovereign debt problems and restore investor confidence. Participants are worried the crisis would spread globally, hitting demand for oil and other commodities."The API numbers were quite supportive as gasoline supplies have come down, but risks continue to be on the economic front," said Victor Shum, an analyst with energy consultancy Purvin and Gertz. "The meeting between Sarkozy and Merkel didn't amount to too much and that will cap gains in oil futures."
US stockpiles of gasoline fell 5.4 million barrels in the week to August 12, well above analyst expectations for a 1.3 million barrel draw, data from the American Petroleum Institute (API) showed on Tuesday. The US Department of Energy will release the inventory data later today.
French President Nicolas Sarkozy and German Chancellor Angela Merkel proposed a tax on financial transactions and closer joint governance of economic policy, but did not propose increasing the euro zone bailout fund or selling euro zone bonds.
Asian shares fell on Wednesday and the euro wobbled after the disappointing meeting, while the safe haven asset gold held steady near a record high.Concerns about the debt crisis have weighed on oil markets in recent weeks, adding to worries about weak US economic data that could hit fuel demand.The euro zone economy slowed sharply in the second quarter, hobbled by sluggish growth in Germany and stagnation in France, raising fears of a longer-term dip.There was more upbeat data out of the US, with industrial output at the world's top oil consumer recording its best gain in seven months in July.
Brent crude may end its rebound at around $109.57 a barrel, while US oil is unlikely to reach $90 per barrel as it faces a strong resistance at $88.17, Reuters technical analyst Wang Tao said.The conflict in Libya and Syria could further disrupt supplies and support oil prices, analysts said."The scale of disruption to Syrian oil production remains unclear, but Syria is reportedly importing gasoline from companies operating in the Mediterranean despite the existing sanctions," said analysts at JP Morgan in a report on Tuesday."As highlighted by recent statements by the US, even tougher sanctions may be required to limit Syria's ability to participate in the oil market."Syrian tanks fired on low-income Sunni Muslim districts in the port city of Latakia on Tuesday, the fourth day of an assault which has killed 36 people and forced thousands of Palestinian refugees to flee, activists said on Tuesday.
From / Arabian Business News