Brent crude inched up on Tuesday, but prices stayed near $114 a barrel as investors sought clarity on policies to help the Eurozone after the European Central Bank squashed speculation about further steps to contain the debt crisis.
Trading is expected to be rangebound as supply concerns stemming from Middle East tensions and maintenance issues in the North Sea offset signs of weak global demand.
“It has to do more with how much money there is to be managed and whether it’s ‘risk on’ or ‘risk off’; the market is reacting more to movements in currencies and stocks,” said Ryoma Furumi, commodities sales manager, Newedge Japan.
“Trading could be choppy, it would lack direction and will depend on what new headlines come out” on the economic front.
Brent crude for October delivery rose 29 cents to $113.99 per barrel at 0233 GMT, after swinging in an almost two-dollar range on Monday.
U.S. crude added 8 cents to $96.05 per barrel.
Asian shares edged up while the euro and the yen rose slightly against the dollar as investors still held on to hopes of some action by the ECB to ease borrowing costs.
Crude futures cut gains on Monday after the German Bundesbank and ECB shrugged off speculation on the form of market intervention the central bank might take to contain the region’s debt crisis.
German magazine Der Spiegel said over the weekend that the ECB was considering buying debt issued by member countries if their interest rates became too elevated, but a bank spokesman said it was misleading to report on yet-to-be decided matters.
MIDDLE EAST TENSIONS
Oil prices remained underpinned by supply concerns triggered by escalating conflicts in Syria and Yemen as well as Iran’s dispute with the United States and Europe which has led to an embargo on Tehran’s crude shipments.
Syrian leader Bashar al-Assad forces attacked a rebel-held town near the Turkish border, while President Barack Obama warned that U.S. forces could move against Assad if he deploys his chemical weapons against rebels trying to overthrow him.
Iran’s crude exports dropped to about 1.1 million barrels per day in June and July from more than 2 million bpd at the start of the year, sources have said.
Adding to worries, production from key North Sea oilfields is expected to fall by about 17 per cent in September after Britain’s largest oilfield Buzzard shut and suspended output until mid-October.
This is still, however, seen as a temporary crunch and investors expect the pressure to ease when Buzzard resumes production.
Traders are also awaiting the weekly U.S. inventory data expected on Tuesday and Wednesday.
Crude oil stockpiles likely rose by 100,000 barrels in the week to Aug. 17 on higher imports and lower refinery runs, according to a Reuters poll of six analysts, with three expecting a build and three projecting a drawdown.