Brent crude rose above $110.50 a barrel today, supported by reduced US crude stocks and positive manufacturing data but countered by economic growth uncertainties.
A speech tomorrow by Federal Reserve chairman Ben Bernanke looks set to be the main event of the week for all markets, as investors wait to see if he will talk about more stimulus for the faltering US economy.
US crude stockpiles fell 2.21 million barrels to 351.77 million barrels in the week to August 19, data from the Energy Information Administration showed, against a forecast for an 800,000 barrel build.
At 7.43am, Brent crude was up 58 cents at $110.73 a barrel, while US crude rose 32 cents to $85.48 a barrel.
The WTI-Brent crude spread was slightly above $25.00
"The market had expected crude stocks to build but the report showed a drop in stocks," said Singapore-based Victor Shum of energy consulting firm Purvin and Gertz.
"That surprised the market, even though, directionally the results from the DOE for crude were consistent with the earlier API report."
Positive US economic data in the form of a 4 per cent jump in durable goods orders in July bolstered sentiment. The rise was double economists' expectations.
Durable goods are items from toasters to aircraft meant to last three years or more.
"We like the economic news and EIA weekly data received recently and think that they suggest that the second half economic rebound may still be a possibility," said MF Global in its daily report.
Investors' confidence that Bernanke will use his Jackson Hole, Wyoming speech to talk about further stimulus seemed to be wavering.
"There was some earlier euphoria about Bernanke announcing some quantitative easing measures, but in my opinion that is more wishful thinking," said Shum.
"Bernanke will likely say something supportive, but likely there won't be much clarity on it."
The oil market also continues to be buffeted by developments in North Africa and the Middle East.
European Union governments are likely to adopt an embargo against imports of Syrian oil by the end of next week, as they move to ratchet up pressure on President Bashar al-Assad, EU diplomats said yesterday.
The EU already has sanctions against dozens of Syrian officials and several state entities but it has taken incremental steps in broadening its measures, with some states concerned about risking commercial interests in Syria.
The situation in Libya remains tense, with Muammar Gaddafi nowhere to be found.
What will be critical for oil markets is how quickly the country's production can return to pre-conflict levels of around 1.6 million barrels per day.
Rebel authorities yesterday called on oil workers to return to the Ras Lanuf and Brega oil terminals in the east of the country, which they gained control of earlier this week.
Reuters
