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Oil rises to near $107 in Europe on improved US confidence after mixed demand signs

Published: February 29, 2012 | 1:34 pm
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Oil prices rose slightly to near $107 a barrel on Wednesday, steadying after a large drop the day before, amid mixed signs about the strength of U.S. crude demand.

By early afternoon in Europe, benchmark oil for April delivery was up 34 cents to $106.89 in electronic trading on the New York Mercantile Exchange. The contract fell by $2.01 to $106.55 per barrel in New York on Tuesday.

In London, Brent crude was up 97 cents to $122.52 per barrel on the ICE Futures exchange.

U.S. crude and oil product inventories were mixed last week. The American Petroleum Institute said late Tuesday that crude inventories rose 521,000 barrels while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1 million barrels.

Inventories of gasoline fell 916,000 barrels last week while distillates dropped 3.3 million barrels, the API said.

The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Meanwhile, an improvement in U.S. consumer sentiment helped bolster oil prices. The Conference Board, a private business research group, said Tuesday that consumer confidence rose to a one-year high in February. However, the government said orders for durable goods in the U.S. in January had the biggest fall in three years.

Crude has jumped from $96 earlier this month amid growing tension over Iran’s nuclear program. Investors will be closely watching the latest data on U.S gross domestic product and industrial production due to be released later Wednesday.

Oil prices were also supported by news that the European Central Bank had made €529.5 billion ($712.4 billion) in low-interest loans to banks, a new step meant to alleviate the continent’s debt crisis.

“Investors’ focus remains on the eurozone’s economic stability, while concerns eased after the confirmation from the ECB of further monetary easing,” said a report from Sucden Financial in London.

In other energy trading, heating oil rose 2.01 cents to $3.2402 per gallon and gasoline futures gained 1.98 cents to $3.2445 per gallon. Natural gas added 1.1 cents to $2.53 per 1,000 cubic feet.

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