Oil rises as traders shrug off rising US crude reserves
World oil prices climbed on Wednesday as traders set aside news of rising crude inventories in top global consumer the United States, one day after the market fell sharply on fears of weaker energy demand.
New York's main contract, West Texas Intermediate light sweet crude for September delivery, gained $1.20 cents to $87.85 a barrel.
Brent North Sea crude for October delivery jumped $1.77 to $110.90.
The US Department of Energy announced Wednesday that American crude reserves soared 4.2 million barrels in the week ending August 12, confounding market expectations for a drop of 600,000 barrels, according to analysts polled by Dow Jones Newswires.
However, gasoline or petrol inventories sank 3.5 million barrels, which was far more than forecasts of a 1.2-million-barrel drop, and indicated keen demand.
"The mood is still nervous on the crude oil market, with all news causing the market to react markedly ... in its search for some direction," said Commerzbank analyst Carsten Fritsch.
Prices fell on Tuesday as worries about global economic growth continued to cast a shadow over the strength of energy demand.
Figures showing the eurozone economy virtually stalling in the second quarter, led by powerhouse Germany, was the main concern.
"The crude oil market is currently driven mainly by macroeconomic fear factors," said Filip Petersson, strategist at SEB Commodity Research.
Traders shrugged off a eurozone meeting that failed to land a killer blow in the battle to restore debt confidence.
Tuesday's summit of French President Nicolas Sarkozy and German Chancellor Angela Merkel, who both called for the formation of a eurozone economic government to help tame the bloc's debt crisis, did little to alter sentiment.
They also said they would propose a new financial transaction tax.
"Sarkozy and Merkel proposed comprehensive measures to tackle eurozone matters, such as increasing economic cooperation in the zone and taxes on financial transactions, but did not manage to formulate a (joint) position on the topics deemed most important," JBC Energy analysts in Vienna said.
"As such, the size of the European bailout fund and the possibility for a eurobond were not touched -- which left those out on a limb who had raised optimism ahead of the meeting."
© 2011 AFP