Oil edges up as Germany seen dodging recession
The price of oil edged up to around $86 a barrel on Tuesday as markets got a boost from a survey indicating that German investors believe Europe's largest economy may be able to elude a recession.
By early afternoon in Europe, benchmark crude for January delivery was up 58 cents to $86.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 37 cents to close at $85.56 per barrel on the Nymex on Monday.
Brent crude, used to price international varieties of oil, was up 87 cents per barrel to $108.20 on the ICE Futures exchange in London.
Germany's ZEW indicator of economic sentiment rose to plus 6.9 points in December, from minus 15.7 in November, greatly outpacing markets expectations.
The results were interpreted as showing that while German growth would cool off during the rest of the year, the country will be not have to face a recession, especially if the debt crisis afflicting the 17-country eurozone does not deepen again.
Investors are also looking to the Federal Reserve to implement new measures to help the U.S. economy.
The Fed, which begins a two-day policy meeting later Tuesday, is widely expected to say it will start buying more long-term Treasurys to replace a program that expires at year's end and is meant to help lower long-term interest rates.
The release of data on U.S. stockpiles of crude oil and refined products will also attract traders' attention.
Data for the week ending Dec. 7 is expected to show a draw of 2.5 million barrels in crude stocks and a build of the same amount in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
Markets are also awaiting this week's meeting in Vienna of OPEC, which produces about a third of the world's oil supply. Expectations are that the group will not make any changes to its production levels — currently 30 million barrels a day — even though actual output is estimated at 31.1 millon barrels a day.
In other energy futures trading on Nymex:
— Heating oil rose 3.48 cents at $2.931 a gallon.
— Natural gas added 0.6 cent to $3.466 per 1,000 cubic feet.
— Wholesale gasoline advanced 2.05 cents to $2.6186 a gallon.
Pamela Sampson in Bangkok contributed to this report.