NEW YORK (Reuters) - Oil prices edged up on Monday in choppy trade, receiving support from U.S. stocks extending their rally and also from a weaker dollar and ongoing turmoil in the Middle East.
Brent and U.S. crude futures recovered from losses attributed to profit taking after Friday’s rally on supportive U.S. jobs additions and hopes that Europe can address its debt crisis.
“Equities moved higher and the dollar is a little lower and that may have been enough to stop the early profit taking after Friday’s big jump,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Expectations for more stimulus measures to support the debt-laden euro zone and the latest pledge by China, the No. 2 oil consuming country, to intensify its fine-tuning of monetary policy to support economic development also helped keep a floor under oil prices.
U.S. stocks hit a three-month high as traders bet that European Central Bank (ECB) plans to lower borrowing costs for Spain and Italy would work, adding to the bullish sentiment after Friday’s strong U.S. July jobs additions. .N
Brent September crude rose 31 cents to $109.25 a barrel by 1:56 p.m. EDT (1756 GMT), after falling to $107.90 and then reaching $109.35, nearly an 11-week high and a penny under the intraday peak from May 22.
U.S. September crude was up 48 cents at $91.88 a barrel, having traded from $90.63 to $92.24, just below the $92.30 intraday peak from July 20 and with the 100-day moving average of $93.58 looming above as potential resistance.
Total crude trading volume was tepid, with Brent and U.S. crude turnover lagging the 30-day moving averages.
The U.S. government on Monday said it would allow the restart of Enbridge Inc’s (ENB.TO) Line 14 pipeline, which has been shut since late last month after a leak.
The shut pipeline carries crude from Canada to U.S. Midwest refineries and had lifted Midwest refined products differentials to the benchmark futures contracts last week. <PRO/U>
U.S. gasoline futures slipped in seesaw trading, while U.S. heating oil rose nearly a penny.
Tropical Storm Ernesto strengthened in the western Caribbean Sea on Monday and was forecast to smack into Mexico’s Yucatan Peninsula as a hurricane.
The U.S. National Hurricane Center’s five-day forecast cone project’s Ernesto to push back into Mexico after it crosses the Yucatan and enters the Gulf of Mexico, avoiding the oil and gas producing areas off the Texas and Louisiana Gulf Coast.
Tropical Storm Florence dissipated into a remnant low pressure area without threatening land.
The violence in Syria and Iran’s dispute with the West over Tehran’s nuclear program continue to keep oil investors worried about the potential threat to oil supply in the region.
Syria’s prime minister defected to the opposition seeking to overthrow the government of President Bashar al-Assad.
The fleeing minister, Riyad Hijab, is from Syria’s Sunni Muslim majority, like much of the opposition. While not part of Assad’s inner circle, as the most senior serving civilian official to defect Hijab’s departure dealt a symbolic blow to an establishment rooted in Assad’s minority Alawite sect.
Iran, a close ally of Syria’s president, plans to host a meeting of regional and other countries this week on ways to resolve Syria’s conflict.
However, only countries with a “realistic” stance on the conflict will be invited to the meeting on Thursday, Deputy Foreign Minister Hossein Amir-Abdollahian was quoted as saying.
The report did not say which countries would be involved. Syria and Iran have accused Turkey, Qatar and Saudi Arabia of backing rebels in Syria and fueling violence there.
Egypt branded Islamist gunmen who killed 16 police near the Israeli border as “infidels” and promised on Monday to launch a crackdown following the massacre that has strained Cairo’s ties with both Israel and Palestinians.
Egypt’s Muslim Brotherhood said on its website that the attack on a police station in Sinai on Sunday in which 16 policemen were killed “can be attributed to Mossad” and was an attempt to thwart Islamist President Mohamed Mursi.
Additional reporting by Gene Ramos in New York and Florence Tan in Singapore; Editing by Marguerita Choy and David Gregorio