SINGAPORE: Brent crude rose on Tuesday, staying above $103 per barrel on hopes of more policy steps by central banks to stimulate global economic growth ahead of US Federal Reserve Chairman Ben Bernanke's testimony.
Bernanke will present his semi-annual monetary policy report to Congress later in the day and on Wednesday against a backdrop of lacklustre growth at home and a worsening debt crisis in Europe. His peers at central banks in China, the euro zone and Britain have already eased monetary policy to prop up their economies.
Brent crude rose 10 cents to $103.47 a barrel by 0519 GMT. The contract rose to as much as $103.74, the highest since late May. US crude was almost unchanged, after settling $1.33 a barrel higher at $88.43.
“The market focus is on further monetary easing measures,” said Ken Hasegawa, a commodity sales manager at Newedge Japan.
“If the global economy is slowing, we can expect oil demand growth to slow down as well.”
Hasegawa expects the two benchmarks to trade in a tight range over the next 24 hours, with Brent staying between $102 and $104 a barrel and the upside for the US benchmark capped at $90 and a floor set at $86.
Weak US retail sales and a lower International Monetary Fund global growth forecast revived hopes the Fed would announce more stimulus, pushing the dollar index down 0.16 per cent, which partly aided the rise in oil prices.
In a mid-year health check of the world economy, the IMF said emerging market nations, long a global bright spot, were being dragged down by the economic turmoil in Europe and warned the global outlook could dim further if policymakers in the euro zone do not act with enough force and speed to quell the crisis.
US retail sales fell in June for the third straight month, the longest run of consecutive drops since 2008, when the country was mired in recession, adding to evidence the world's largest economy was slowing.
“The US retail sales figures released last night are a reminder of the negative impact that concerns over Europe have had on international consumer activity,” Ric Spooner, chief market analyst at CMC Markets, said in a report.
Brent oil is expected to hover around $102.43, the neckline of a possible inverted head-and-shoulders pattern, while US oil will gain more to $89.50 per barrel, driven by a wave (c), according to Reuters technical analyst Wang Tao.
Despite the backdrop of a weakening economic outlook, oil prices have risen in the past sessions partly due to worries over a supply disruption from the Middle East. Brent has slipped 20 per cent from the highs for the year touched in March due to worries about demand growth, but found a floor because of simmering tensions over Iran's disputed nuclear programme.
A US Navy vessel off the United Arab Emirates fired on a fishing boat that failed to heed warnings, killing one and injuring three. That pushed oil higher on Monday, serving as yet another reminder of how quickly a confrontation can turn deadly in the Gulf.
US Secretary of State Hillary Clinton said on Monday the United States and Israel were “on the same page” in their determination to prevent Iran from achieving what the West fears is its goal of building a nuclear bomb.
World powers and Iran have had several rounds of talks to resolve the standoff, but have so far failed to secure a breakthrough.
Disruptions in output from Norway, the world's eighth largest oil producer, are also helping push up Brent prices.
Norway's oil and gas industry, which just emerged from a strike that had cut oil production by 13 per cent, risks fresh disruption to drilling and output in coming months if a new round of pay and pension talks fails, union leaders said.
“Brent continues to get support on the supply side, with Europe's largest oil producer Norway reporting the lowest monthly production run rate in 21 years in June at 1.502 million barrels per day,” analysts at ANZ said in a note.