Oil gains ground as risk appetite recovers
London, September 14, 2011
Brent crude rose on Wednesday as proposals from the European Commission to issue joint bonds reassured investors hoping for a resolution to the euro zone debt crisis.
The move was relatively muted, however, as uncertainty remained on the outlook for the euro zone and as data was due on US stockpiles and demand from the US Energy Information Administration at 1430 GMT.
Brent crude futures were up 25 cents at $112.14 per barrel. US crude was down 63 cents at $89.58.
US crude stockpiles are likely to have fallen for a second consecutive week as preparations for Tropical Storm Lee disrupted production in the oil-rich Gulf of Mexico, an extended Reuters poll showed on Tuesday.
US trade group the American Petroleum Institute reported on Tuesday that crude stockpiles fell a larger-than-expected 5.1 million barrels last week. Analysts polled by Reuters estimated a 3.1 million barrel drop.
'We're in a holding pattern, there's lots of expectation,' said Harry Tchilinguirian, head of commodity market strategy at BNP Paribas.
'The market is trading on risk appetite, so people will be watching the conference call between Sarkozy and Merkel closely watched.'
Greek Prime Minister George Papandreou will hold a conference call on Wednesday with French President Nicolas Sarkozy and German Chancellor Angela Merkel. The call is scheduled for 1600 GMT, Papandreou's office said.
Investors remained nervous about the outlook for oil demand. The International Energy Agency said on Tuesday that world oil consumption would increase more slowly this year and next than previously expected as the pace of global economic growth eases.
Also contributing to the gloom, Moody's Investors Service cut its ratings for French banks Credit Agricole and Societe Generale on Wednesday, citing their exposure to Greece. -Reuters