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Oil rises $1 on data, stocks and Libya Prospects of an early return for Libyan supplies and pledges from European finance ministers to safeguard the financial sector help push oil prices up
Oil prices jumped US$1 a barrel on Thursday on growing expectations that Europe would take steps to support its banks and as economic and industry data suggested global growth may be stronger than anticipated. German Chancellor Angela Merkel has said Berlin is ready to recapitalise its banks if needed, adding to pledges by Europeanfinanceministers to safeguard the financial sector in the face of mounting concerns about a Greek default Theeuro zoneand UK central banks were both due to make interest rate announcements and their policy meetings were being watched for hints of future monetary easing. Hopes of an early return of Libyan supplies to global markets after months of war looked misplaced after Italian oil major Eni said it feared its largest oilfield in the North African nation might be in ruins. Also supportive were data showing U.S. crude and gasoline inventories fell last week instead of rising as forecast, while distillatesstocksdropped more than expected. Brent crudefuturesfor November LCOc1 were up 80 cents at $103.53 by 0825 GMT, adding to a gain of nearly 3 per cent the previous day. U.S. crude CLc1, which jumped more than 5 per cent on Wednesday, was up $1.24 at $80.92 a barrel. "Stock markets are up, there was a surprisingly large drop in U.S. oil inventories and the market is coming back after recent falls," said Carsten Fritsch,commoditiesanalyst at Commerzbank in Frankfurt. "I think we might be able to see Brent trading around $100 for a while unless there is another sharp deterioration in the economic outlook," Fritsch added. Reports suggesting Europe would step in to assist its financial sector helped base metals, the euro and global stock markets recover. U.S. economic data pointing to an improved outlook for industrial metal demand also provided support. RESISTANCE Brent faces resistance at $103.24 per barrel, a break above which will trigger a further rebound towards $105.79, said Reuters market analyst Wang Tao. Crude stocks dropped 4.68 million barrels to 336.28 million barrels in the week to Sept. 30, the U.S. Energy Information Administration said, beating analysts' expectations for a 1.9 million barrel build. Gasoline stocks fell an unexpected 1.14 million barrels, while distillates slipped 744,00 barrels, the EIA said. Italian oil major Eni's largest oilfield in Libya, known as Elephant, may be in ruins, its operations manager, Mustafa Abougfeefa, said in an interview. The oil field pumped 130,000 barrel per day before the war. "We cannot promise the field will start producing before the end of the year. Gaddafi's militia destroyed everything," Abougfeefa said. Global oil prices below $90 a barrel would be difficult to accept, Iraq's Deputy Prime Minister for energy Hussain al-Shahristani told Reuters on Wednesday, in a sign a slide in prices is starting to worry some members of oil cartel the Organization of the Petroleum Exporting Countries (OPEC). Shahristani added that he saw no need for OPEC to review its crude output at its next meeting in December and no reason now to trim production. Still, volatility in oil prices will remain as investors take positions based on the economic outlook for the western hemisphere, analysts said. U.S. initial jobless claims later on Thursday will be the next clue to how the world's largesteconomy is doing. The market will also focus on non-farm payrolls data due on Friday.
