Brent eased toward $109 (€84.24) a barrel this morning as investors eyed a Cyprus vote later in the day on a bailout plan that revived concerns about the euro zone debt crisis, although losses were capped by a rosier economic outlook in the United States.
Cyprus will decide whether to go ahead with a controversial plan to impose a levy on bank deposits to secure a $10 billion euro bailout from the European Union. The proposal announced over the weekend broke calm in the euro zone and caused global markets and the euro to tumble yesterday.
The move sparked concerns of a run on banks elsewhere in the euro zone and worries that similar extraordinary measures might be taken if other indebted member states need funding help. Such a scenario would weaken demand for oil from the euro zone.
Brent crude for May delivery was down 11 cents at $109.40 a barrel in early day trade. It briefly hit a three-month low yesterday before settling 31 cents lower. US crude for April edged up 7 cents to $93.81.
Global markets recovered today as confidence was partially restored by news that the Eurogroup decided to give Cyprus more flexibility over a bank levy which is part of the bailout conditions.
In the US, investors eyed the Federal Reserve's policy meeting for any indication on whether it will scale back its very accommodative monetary stance as the economy is showing signs of improvement.
Almost all US states began 2013 with lower unemployment rates than they had at the start of 2012, Labor Department data showed yesterday.
Investors will also watch for US oil inventories data due today and tomorrow for a further fall in crude stocks at oil futures delivery hub Cushing, Oklahoma, that could strengthen West Texas Intermediate (WTI) prices against Brent.
US commercial crude stockpiles are expected to have risen 2 million barrels last week amid low refinery runs, a preliminary Reuters poll of analysts showed on Monday.
Distillate inventories likely fell 1.2 million barrels, while gasoline supplies are seen down 2.5 million barrels, the poll showed.
Reuters
