Oil rose above $114 a barrel in volatile trading on Friday after U.S. Federal Reserve Chairman Ben Bernanke stopped short of signaling that further monetary easing was imminent, but kept the door open for future action in a much-anticipated speech.
Oil prices initially pulled back after Bernanke's address at a central bankers' symposium in Jackson Hole, Wyoming, but as traders parsed the details, the prices were quick to move higher, supported by stronger-than-expected U.S. economic data.
Figures released on Friday showed U.S. factory orders posted the biggest rise in 12 months in July, jumping 2.8 percent, while the Thomson Reuters/University of Michigan survey of consumer sentiment showed the index rising to 74.3 in August from 73.6 in a preliminary August report.
"There was no announcement about if more stimulus was coming immediately, but he (Bernanke) said the Fed was ready to act if necessary so that was supportive," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
"Along with the factory orders and consumer sentiment data, the (market) longs are in control."
Brent crude was up $1.83 at $114.48 a barrel at 2:02 p.m. EDT (1802 GMT), having earlier reached $114.78. Brent is on course to gain around 9 percent in August after rising 7 percent in July. It would be the biggest monthly percentage gain since February's 10.5 percent jump.
U.S. crude rose $1.82 to $96.44, having earlier risen to the 200-day moving average at $96.68, a key technical resistance level closely watched by traders.
Quantitative easing is viewed by many investors as likely to boost the price of commodities and other hard assets as it tends to depress the value of the dollar.
The euro rose against the dollar on Friday, boosted by signs of progress toward a deal to tackle the euro zone debt crisis.
Trading volume was thin ahead of a long weekend in the United States, with Brent turnover 23 percent below the 30-day average, while U.S. volume lagged its 30-day average by 37 percent at midday in New York.
U.S. markets will be closed on Monday for the U.S. Labor Day holiday.
STRATEGIC RESERVES IN FOCUS
Crude prices were further supported by reports Germany and Italy remain opposed to a release of emergency consumer oil stocks, which created further uncertainty about the timing of any possible release as sanctions on Iranian exports have tightened the market and boosted prices.
Meanwhile, the Department of Energy loaned 1 million barrels of light sweet crude oil to Marathon Petroleum Corp
"This emergency loan from the Strategic Petroleum Reserve will help ensure Marathon's refining operations have the crude oil they need to continue operating," Energy Secretary Steven Chu said.
The DOE added it continues to "keep all options on the table to address additional or sustained oil supply issues."
Overall, however, the Gulf of Mexico oil and gas industry has so far reported little major storm-related damage to infrastructure although one Louisiana refinery had flooding. Energy production is expected to start ramping up again over the weekend.
Traders said oilfield maintenance in the North Sea was also boosting prices, with a potential strike by Norwegian oil workers looming just weeks after a walkout lasted 16 days and stopped 13 percent of Norway's oil production.
Norwegian oil drilling workers may strike on Sunday at installations operated by KCA Deutag in two North Sea fields, but production will not be affected, a union leader said Friday.
Fighting in Syria and tension over Iran's nuclear programme also lent support.
A U.N. report said on Thursday Iran had doubled the number of uranium enrichment centrifuges it has in an underground bunker, showing Tehran has expanded its nuclear work despite Western pressure and the threat of an Israeli attack.
