Brent rises above $101 on euro zone hopes

Wed Jun 6, 2012 12:44pm EDT
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By Gene Ramos

NEW YORK (Reuters) - Crude oil futures jumped more than 2 percent on Wednesday, with Brent returning to above $100 a barrel, on hopes that European officials would mount a rescue to Spain's troubled banks to ease the euro zone debt crisis.

Oil also got support from a U.S. Federal Reserve official's comments that the central bank may need to consider further monetary easing if the shaky economy falters or Europe's crisis spawns a broader financial shock. <ID: nL1E8H62QW>

Oil pared gains, however, after U.S. government data showed a much smaller-than-expected drawdown in domestic crude stockpiles last week after 10 straight weeks of stock builds. <EIA/S>

In London, Brent crude for July delivery traded up $2.41 at $101.25 a barrel by 12:20 p.m. EDT (1620 GMT), after hitting a session high of $101.39. On Friday, Brent fell below $100 for the first time since October.

U.S. July crude was up $1.63 at $85.92, after climbing to a session high of $86.27. It was the third straight daily rise.

The European Central Bank left interest rates unchanged, as expected, as policymakers explored ways to rescue Spain's debt-laden banks. Investors were now looking for the ECB to signal monetary stimulus to bolster the struggling economy and restore confidence in the euro zone.

ECB President Mario Draghi put the onus on European political leaders to resolve the debt crisis, somewhat lowering the optimistic expectations.

In the United States, Atlanta Fed President Dennis Lockhart said that the Fed may need to consider more monetary stimulus should the U.S. economy cool down further.   Continued...

A worker collects crude oil sample at an oil well operated by Venezuela's state oil company PDVSA in Morichal July 28, 2011. REUTERS/Carlos Garcia Rawlins