KUALA LUMPUR, Malaysia (AP) — Oil rose above $101 a barrel Thursday in Asia after the IMF promised to raise lending to mitigate a worsening financial crisis in Europe. Stronger U.S. economic data also gave oil a lift.
Benchmark crude for February delivery was up 88 cents at $101.47 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell 12 cents to end at $100.59 on Wednesday.
"Trading has been choppy but the market recovered on news that the IMF will boost its lending capacity for Europe," said Natalie Robertson
The International Monetary Fund estimated countries around the world would need about $1 trillion in loans over the coming years and said it aimed to increase its financial firepower by around $500 billion so it can give out new loans.
The IMF has put up about a third of the financing for Europe's bailouts over the past two years, but there are growing worries that non-European countries will also need more help given the worsening economic outlook.
Robertson said prices were also supported by the American Petroleum Institute's report Wednesday showing an unexpected drop in crude inventory last week. The government is expected to release its weekly data later Thursday.
Strong U.S. housing figures, an improvement in U.S. manufacturing activity in December and increased orders and production also buoyed crude prices, she said.
Bank of America Merrill Lynch predicted limited upside, with crude prices to average $101 a barrel this year. it cited weak oil global demand after the International Energy Agency cut its forecast for oil demand growth to 1.1 million barrels a day, down from an earlier estimate of 1.3 million barrels a day.
In other energy trading, heating oil rose 1.6 cent to $3.03 per gallon and gasoline futures rose 0.8 cents to $2.84 per gallon. Natural gas fell 5.3 cents to $2.42 per 1,000 cubic feet.