Oil prices held steady above $118 today as concerns on the euro zone crisis eased after a successful Spanish debt auction and a better growth forecast from the International Monetary Fund.
The IMF offered a cautiously optimistic view on global growth, which it said is slowly improving as the US recovery gains traction and dangers from Europe recede.
While the euro zone will suffer a mild recession, the IMF said it would be less severe than feared after moves to calm markets at the turn of year.
Brent June crude slipped seven cents to $118.71 a barrel earlier, after settling higher at $118.78 in the previous session.
US May crude gained 18 cents to $104.38, after settling at its highest close since April 2nd. The May contract expires on Friday.
"Traders' risk appetite improved after the successful debt auction, IMF increasing global growth forecast and good data from Germany," said Natalie Robertson, an analyst at ANZ.
"Going forward, the crude market will trade sideways with a potential increase in demand in July once the refineries are back from maintenance."
Spanish bond yields, which have surged in recent days on concerns about the country's economy, eased back as Tuesday's better-than-expected bill sale brightened the mood.
Traders held back their optimism, however, as Spain faces a far more significant challenge tomorrow, with the sale of longer-term bonds.
The IMF also appeared to be inching toward a deal on increasing its financial firepower yesterday, with Japan, Sweden and Denmark committing a total of $77 billion to help contain the euro zone's debt crisis.
Also boosting sentiment, a survey in Germany, Europe's biggest economy, showed an unexpected rise in analyst and investor confidence in April.
Reuters
