Published — Wednesday 30 January 2013
Last update 30 January 2013 3:40 am
LONDON: Brent crude oil stayed close to three-month highs above $ 113 after US data pointed to a strengthening housing market, raising hopes of faster economic growth and higher fuel demand.
Financial markets rallied across the board on the data, which showed single-family home prices rose in November for the 10th month in a row.
Adding to optimism, a poll by market research group GfK showed German consumer morale rose for the first time in four months.
Brent crude was unchanged on the day at $ 113.48 per barrel by 1535 GMT, while US crude rallied to its highest since September at $ 97.32, up 88 cents, before easing back to trade around $ 97.00.
“Growth and recovery news in the United States and Europe are on the positive side,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo. “Sentiment and the technical analysis are still clearly bullish.”
Markets were awaiting the outcome of a two-day Federal Reserve policy meeting as well as first estimates for fourth-quarter gross domestic production (GDP) in the US.
The US Federal Reserve has said it expects to keep short-term interest rates exceptionally low to help support the economy.
“Economic optimism ahead of the Fed meeting and some technical momentum with US crude able to stay above $ 95 has US crude higher,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Persistent tension in the Middle East and Africa also supported oil.
In Egypt, the head of the military warned political conflict could lead to the collapse of the state and said protecting the Suez Canal was one of the main objectives of the army deployment to cities shaken by violence.
Oil prices continued to be underpinned by the closure of Hess Corp’s New Jersey refinery, news of which boosted US gasoline futures by more than 2 percent on Monday.
The loss of the plant, the latest in the region to fall victim to poor profits, tightened the supply outlook for the US northeast, which is likely to have to rely more on imports and supplies from the Gulf Coast, according to analysts.
Traders awaited data on US crude and oil products stockpiles for clues on demand.
A Reuters survey, taken ahead of weekly inventory reports from the American Petroleum Institute and the US government’s Energy Information Administration, saw crude stocks rising by 2.6 million barrels on average for the week ended Jan. 25.
Gasoline inventories were forecast to have increased by an average 100,000 barrels for the week.