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Oil rises over $113 ahead of central bank meet

Oil rises over $113 ahead of central bank meet
Oil rises over $113 ahead of central bank meet
Oil rises over $113 ahead of central bank meet

Investors will look for any hint of a third round of quantitative easing in a speech by Fed Chairman Ben Bernanke at a meeting of central bankers and economists in Jackson Hole, Wyoming on Friday. Brent crude for October delivery rose 71 cents to $113.25 a barrel by 0949 GMT. U.S. crude slipped for a second session, down 11 cents to $95.38.

“Things are quite balanced at the moment. The Jackson Hole meeting might be a reason for the consolidation right now,” said Eugen Weinberg, an oil analyst at Commerzbank in Frankfurt. “There are expectations that there could be something announced but likely not. Though clarity would be good.”

Weekly jobless claims, the Chicago Purchasing Managers Index (PMI) and factory figures expected later on Thursday and on Friday could provide hints at the health of the largest crude buyer’s economy, Weinberg added. The U.S. economy fared slightly better than expected in the second quarter, but the pace of growth remained too slow to shut the door on further monetary easing. Gross domestic product expanded at a 1.7 percent annual rate.

“The Fed is likely to sustain its rhetoric to support the economy for as long as it can,” Deutsche Bank analysts said in a note. Chances of more stimulus measures are slim as the U.S. presidential elections draw closer, they said.


Prices were also underpinned by worries over North Sea production, which sets the price of the dated Brent global oil benchmark. Norway’s oil service workers may go on strike in September, which could disrupt supply from the world’s eighth-largest exporter. Riding a global exploration boom and backed by Europe’s fastest growing economy, the workers can almost set their own terms.

This could be the workers’ second strike in just over a month after they caused a partial shutdown of the country’s oil and gas industry. North Sea production will already be much reduced in September due to maintenance and field declines. Wider supply worries on the back of Hurricane Isaac, however, dissipated after the system was downgraded to a tropical storm and caused no discernible damage to refineries or offshore oil and gas platforms.

Talks that consuming nations may release strategic oil reserves have capped oil prices. The White House reiterated on Wednesday that the option of releasing oil from the Strategic Petroleum Reserve remained on the table but that it had no announcements to make.

Just a day earlier, the Group of Seven finance ministers expressed concerns over high oil prices and said they stood ready to call on the International Energy Agency to ensure the market is well supplied. U.S. crude inventories rose unexpectedly last week to 3.78 million barrels in the week to August 24, the Energy Information Administration said on Wednesday.

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