Oil jumps 2 percent on North Sea output drop, stimulus hope

Tue Aug 7, 2012 2:09pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices jumped 2 percent on Tuesday and were up for the third straight session due to falling North Sea output, support for more bond buying by the U.S. Federal Reserve and Middle East tensions.

Crude oil and U.S. refined products futures moved above key moving averages to add technical support to the day's bullish sentiment.

Boston Federal Reserve Bank President Eric Rosengren's statements in interviews saying that the Fed should start buying Treasury and mortgage-backed securities and continue doing so until the economy was back to full strength revived investor hopes for more stimulus.

Rosengren's remarks supported investor expectations that the Fed may yet act even though he is not a voting member this year on the Fed's policy-setting committee.

North Sea crude oil output is set to fall to a record low of 720,000 barrels per day (bpd) in September, adding to supply tightness with the European Union's embargo on Iranian oil now in its second month.

"The news about the record low North Sea loadings got Brent going early and it has lifted everything else," said John Kilduff, partner at Again Capital LLC in New York.

"Also the Boston Federal Reserve president saying he is in favor of more bond buying revived hopes about more stimulus from the Fed," Kilduff added.

Syria's embattled President Bashar al-Assad won a pledge of support on from Iran as his forces tried to choke off rebels in the northern city of Aleppo. Shown on television meeting a senior Iranian official, it was Assad's first broadcast appearance in two weeks.   Continued...

An attendant prepares to refuel a car at a petrol station in Rome January 4, 2012. REUTERS/Max Rossi