Stocks in Asia and Europe climbed after talks to bailout US bond insurers, which yesterday lifted shares in the US for the first time in six days. |
The Federal Reserve made an emergency interest rate cut two days ago to stave off a recession in the world's biggest energy user. |
"What we're seeing is a short-term move higher in crude along with equities as a consequence of the Fed decision," said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. "Oil came down substantially yesterday and this is essentially a counter-reaction." |
Crude oil for March delivery rose as much as $1.19, or 1.4 percent, to $88.18 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $88.02 at 10:50 a.m. London time. The contract fell 2.5 percent to $86.99 yesterday, the lowest close in three months. |
Brent crude for March settlement climbed as much as $1.23, or 1.4 per cent, to $87.85 a barrel on London's ICE Futures Europe exchange. It was at $87.66 at 10:51 am London time. |
The contract yesterday fell $1.83, or 2.1 per cent, to $86.62 a barrel, the lowest close since October 24. Futures reached a record $98.50 on January 3. |
Oil is also drawing support from speculation the Organization of Petroleum Exporting Countries (Opec) will maintain production targets when it meets February 1. |
"Prices may falter if the US Energy Department reports higher crude levels nationwide later today," said Raiffeisen Zentralbank's Loacker. |
The Federal Reserve cut its benchmark lending rate by three-quarters of a percentage point to 3.5 per cent on January 22, citing increasing risks to the nation's economic growth. It was the first emergency move since the September 11, 2001 terrorist attacks. |
The US consumes about a quarter of global oil output. |
"The Fed's action shows a US recession is relatively near and this should have consequences for demand," said Loacker. "Investors are hesitant to put more money in the crude market as they fear a drop in demand." |
US crude-oil stockpiles probably rose for a second week, gaining 1.5 million barrels at January 18, based on the median estimate from a Bloomberg survey of 16 analysts. Gasoline supplies probably climbed 1.4 million barrels last week, the 11th straight increase, even as refining rates were unchanged. |
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