Forexpros – Crude oil futures pared losses on Wednesday, re-approaching the previous session’s three-month high as speculation that the European Central Bank was buying Italian and Spanish government debt helped lift sentiment.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD99.08 a barrel during European morning trade, shedding 0.35%.
It earlier fell by as much as 1.05% to trade at a daily low of USD98.44 a barrel. Prices rose to USD99.80 a barrel on Tuesday, the highest since July 26.
Crude prices came off their lows after Italian government borrowing costs eased back below the 7% threshold, a level widely viewed as unsustainable in the long term.
Later Wednesday, incoming Italian Prime Minister Mario Monti was due to meet with President Giorgio Napolitano to officially accept the post and present his new government.
Spanish yields also declined, falling to 6.22% from Tuesday’s three-month high of 6.34%, amid speculation the ECB was purchasing bonds in the secondary market.
However, worries over potential debt contagion in core euro zone economies continued to weigh on risk appetite, with investors eyeing Spanish and French bond auctions scheduled to take place later Wednesday and on Thursday.
A stronger U.S. dollar weighed on prices during the Asian trading session. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.1% to trade at 78.19.
Meanwhile, oil traders were awaiting key weekly government data on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The report was expected to show that U.S. crude oil stockpiles fell by 1.2 million barrels last week, while gasoline supplies were forecast to fall by 1.0 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 1.3 million barrels last week, while total gasoline supplies fell by 2.9 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery shed 0.2% to trade at USD111.97 a barrel, with the spread between the Brent and crude contracts standing at USD12.89 a barrel.
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