Forexpros – Crude oil futures gained for a third day on Wednesday, trading at the highest level since mid-January as market sentiment improved after China said it would increase its investment and support the euro zone, as investors continued to eye potential supply disruptions from the Middle East and Africa.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at USD102.05 a barrel during European morning trade, jumping 0.95%.
It earlier rose by as much 1.1% to trade at USD102.17 a barrel, the highest since January 19.
Market sentiment was boosted after the Governor of the People’s Bank of China Zhou Xiaochuan said he believes the euro zone’s challenges can be solved and that he fully supports measures taken by the European Central Bank during the crisis.
He also said that China will become more involved in efforts to resolve the crisis through mechanisms such as the European Financial Stability Facility, the region’s bailout fund.
Meanwhile, oil traders continued to focus on developments surrounding growing tensions between Iran and Israel. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Developments surrounding Greece were also in focus. Euro zone finance ministers cancelled a meeting planned for later Wednesday in Brussels and will hold a teleconference call instead to discuss the approval of Greece’s second bailout.
Greece has a EUR14.5 billion bond repayment due on March 20 and requires the bailout funding in order to be able to make that payment and avoid a messy default.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.3% to trade at 79.31.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 2.9 million barrels last week to 337.8 million, while gasoline stockpiles advanced 1.81 million barrels.
Oil traders were looking forward to the U.S. Energy Information Administration’s more closely-watched weekly report 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 rose by 1.7 million barrels last week, while gasoline supplies were forecast to increase by 0.7 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.75% to trade at USD118.23 a barrel, with the spread between the Brent and crude contracts standing at USD16.18 a barrel.
Brent prices were boosted by fresh supply worries from South Sudan, after Sudan seized another 2.4 million barrels of crude over a continued dispute on payment issues.
South Sudan seceded from Sudan in July under a 2005 peace deal that ended decades of civil war, but the two countries have remained at odds over issues including oil, debt and fighting along the poorly drawn border.
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