LONDON (Reuters) – Oil climbed to around $101 a barrel as part of broader rallies on global markets on Wednesday due to hopes that a revamped U.S. financial rescue package will be passed.
The U.S. Senate will vote on Wednesday night on a new version of the $700 billion bailout package for Wall Street, rekindling hopes that the credit crisis can be stemmed before claiming yet more banks and causing further damage to the global economy.
U.S. crude was trading 48 cents higher at $101.12 a barrel by 6:48 a.m. EDT, after rising by more than $2 to as high a$102.84.
London Brent crude was 29 cents up $98.46.
On Tuesday, U.S. crude settled $4.27 higher at $100.64, rebounding from Monday’s sharp $10 loss that was in reaction to the rejection of the original rescue plan by the U.S. House of Representatives.
“There is a strong belief that the U.S. Congress will pass the rescue plan in a few days, so that’s supporting prices,” said Ryuichi Sato, an analyst at Mizuho Corporate Bank in Tokyo.
Asian and European shares rose, led by banks, on Wednesday. U.S. stocks soared on Tuesday, with the Standard & Poor’s 500 index .SPX marking its biggest one-day gain in six years.
Analysts said that economic slowdown would keep oil demand relatively weak, however, weighing on oil prices.
“Prices over the coming months look vulnerable to further weakness, as sentiment continues to plummet on a weakening demand backdrop,” said Mark Pervan, a resource analyst at Australia & New Zealand (ANZ) bank based in Melbourne.
Oil traders will watch U.S. weekly oil data for supply-demand fundamentals in search of market direction.
Analysts in a Reuters poll expect the government data to show an increase in crude oil stocks and drops in oil product inventories when it is released at 10:35 a.m. EDT.
The analysts forecast a 2.4 million barrel increase in crude oil inventories in the week to September 26. Distillate stocks were seen falling 1.2 million barrels with gasoline inventories seen down by 1.6 million barrels.