Brent steady above $120 as growth worries ease

Thu Apr 12, 2012 3:47pm EDT
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By Manash Goswami

SINGAPORE (Reuters) - Brent crude held steady above $120 on Thursday as a weaker dollar helped recoup losses made earlier in the day, while comments from the U.S. Federal Reserve and the European Central Bank eased worries about growth in oil demand.

The Fed said the U.S. economy expanded modestly in January through mid-February as hiring picked up a bit across several districts. Across the Atlantic, comments by a European Central Bank official on keeping a bond-buying program as an option to help Spain eased worries about the region's fiscal woes.

Brent crude rose 31 cents to $120.49 a barrel by 2:23 a.m. EDT (0623 GMT), after touching a low of $119.93 earlier in the session. U.S. oil rose 37 cents to $103.07, adding to $1.68 gains in the previous session. The dollar .DXY weakened 0.25 percent against a basket of currencies.

"The overall expectation is that Europe would be able to manage this crisis," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments. "The ECB has measures that it can take. If you look at Greece, all its problems may not be over, but the region is taking measures to tackle them."

Investors have been worried about oil demand growth after a recent spate of weak numbers from the United State and China - two of the world's top economies - that suggest the health of the global economy may be worse than expected.

The worries were echoed by Janet Yellen, the No. 2 official of the U.S. central bank, who said on Wednesday the Federal Reserve's ultra-easy monetary policy is appropriate given high unemployment and the headwinds facing the economy.

Still, the comments from Yellen and two other top U.S. Federal Reserve officials suggest the central bank is on hold as it waits to see whether a modest recovery will accelerate despite some stumbles, or whether more monetary stimulus, also known as quantitative easing, will be needed.

The central bank's Beige Book released on Wednesday had much the same cautiously upbeat tone as the previous report, and pointed to some improvement even in the battered housing sector.   Continued...

Gas prices are shown at a gas station in Beverly Hills, California May 20, 2008. REUTERS/Lucy Nicholson