Oil rises for second day on supply concerns

Fri Sep 21, 2012 1:56pm EDT
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By David Sheppard and Matthew Robinson

NEW YORK (Reuters) - Oil rose for a second straight session on Friday as supply concerns and economic optimism fuelled a rebound from a 7 percent slide earlier in the week.

Brent crude topped $111 a barrel in U.S. trading. That followed a three-day sell-off through Wednesday that had sent prices from over $116 down to $108 due to rising U.S. inventories and efforts by Saudi Arabia to tame prices.

Oil scraped lows not seen since early August on Thursday, before turning positive in a move that could be a sign the market is establishing a new range as traders digest a third round of U.S. quantitative easing, unrest in the Middle East and North Africa, and delays in North Sea oil shipments.

"I'm not really sure we've seen a turnaround yet. Oftentimes when the market sees a lot of liquidation pressure it rebounds when that dissipates," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

"Going forward, I think the market has established a bit of a new trading range from $90 to $100 (a barrel for U.S. crude) and it's trying to find a value here and settle down."

Oil found some support from optimism over a move by Spain toward reform measures in anticipation of a bailout package. Equities markets rose. .N

November Brent futures traded up $1.38 to $111.41 a barrel at 1:37 p.m. EDT (1758 GMT), after touching highs of $111.58. Brent hit a low of around $107 on Thursday, its weakest since August 3. On Friday, it edged back above its 50-day moving average around $118.18, a technical indicator watched by traders.

Front-month November U.S. crude futures gained 67 cents to trade at $93.09 a barrel, off highs of $93.84. The October contract for U.S. crude expired on Thursday at $91.87 a barrel, having tested the 100-day moving average of $90.73.   Continued...

A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011. South Korea, as a member of the 28-nation IEA, will release 3.46 million barrels oil stocks over 30 days after a meeting with local refiners later on Monday. REUTERS/Jo Yong-Hak