Brent hits $104 on Mideast fear, hopes for Fed action

Wed Jul 25, 2012 3:39pm EDT
 
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By Gene Ramos

NEW YORK (Reuters) - Crude oil futures made a strong comeback on Wednesday, with Brent closing above $104, recovering from session lows on fears that Middle East turmoil could worsen and rising hopes for more U.S. Fed stimulus.

Prices fell earlier on euro zone worries and after U.S. government data showed an unexpected rise in domestic crude stockpiles last week that stoked oil demand worries.

"The geopolitical risk is out there, with worries about Syria and chemical weapons if they got into the wrong hands, and there is positive sentiment about the Fed and (potential) stimulus," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

In London, September Brent crude shot to a session high of $104.71 a barrel near the close and settled at $104.38, rising 96 cents and extending gains into a second day. It hit a session low of $102.10 after the release of the stockpile data.

U.S. September crude settled at $88.97, gaining 47 cents, after hitting a session low of $86.84. In late trading, it jumped to a session high of $89.36.

Brent's premium against U.S. crude rose 49 cents to $15.41 by 2:40 p.m. EDT (1840 GMT).

Volumes were thin, with Brent trading down 30 percent from the 30-day average and U.S. crude turnover 18 percent below its 30-day norm, according to Reuters data.

U.S. crude oil inventories rose 2.7 million barrels last week on sharply higher imports, defying forecasts for a modest drawdown, data from the U.S. Energy Information Administration showed. <EIA/S>   Continued...