Crude Lifted By Optimism Over Global Economy, Yet Caution Persists

Crude prices were lifted on Tuesday by the optimism over the global economic outlook amid signals of improved growth in the U.S. and China while Bank of Japan pledged to fight deflation and add more stimulus, improving the outlook for demand on oil.

BoJ doubled its inflation target to 2% and will purchase about 13 trillion yen ($145 billion) of assets per month from January 2014, amid pressures from new Prime Minister Shinzo Abe who calls for bolder actions to overcome deflation and lift the economy out of recession.

"A stronger Japan is good for the global economy. Japan's energy demand will depend on what they do with the nukes and infrastructure that could create more energy efficiency," said Jeremy Friesen from Societe Generale in Hong Kong.

Also pushing oil prices higher was the euro-area finance ministers, who approved yesterday the payout of 9.2 billion euros ($12.3 billion) to Greece this month, easing the worries over the debt crisis in the region. EU accounted for 16% of the world’s oil consumption in 2011.

Crude is trading as of this writing with an upside momentum around $96.15 a barrel compared with the opening at $95.83 and with the highest at $96.19 and the lowest at $95.75. Crude finds on the short-term resistance at $95.50 and support at $95.00.

Yet, the lack of agreement on the U.S. debt ceiling and the worries about supply disruption in the Middle East and North Africa is keeping investors cautious. Investment in Algeria’s oil and gas sector may plunge as concerns about the costs of security rose.

Brent is trading as of this writing around the $112.00 after rising 0.26%; natural gas is trading at $3.633 per 1,000 cubic feet after rising 1.88%; gasoline is trading at $2.8036 a gallon after rising 0.24%; heating oil is trading at 3.0762 after rising 0.78%.