Brent climbs near $ 111 after four-day fall, growth woes cap rise

Reuters: Brent crude edged up towards $111 a barrel on Monday after a four-day decline spurred by worries over a fragile global economy, with supply risks supporting prices as violence in the Middle East intensified.

Brent lost 4 percent last week and may stretch losses to a second straight month in October amid global economic uncertainty. But growing violence in parts of the Middle East, which supplies a third of the world’s oil, has helped counter concerns over weaker fuel demand.

Also supporting oil prices, along with a softer dollar versus the euro, are delays in the restart of both a major Canadian crude oil pipeline to the United States and the North Sea Buzzard oilfield.

Brent crude for December delivery had risen 0.5 percent to $110.61 per barrel by 0631 GMT, recovering from a session low of $109.47, its weakest since October 4.

U.S. oil was up 0.4 percent at $90.47, also bouncing back from an intraday trough of $89.49.

Brent crude’s premium to West Texas Intermediate futures, measured between December contracts, narrowed to around $20 from more than $24 last week, the widest in a year.

“We continue to have the same push and pull factors. The demand outlook remains weak, but geopolitics remains the wild card,” said Victor Shum, managing director for downstream energy consulting at IHS Purvin and Gertz.

Investors were also buying back oil after prices fell over the past four sessions, said Ken Hasegawa, commodity sales manager with Newedge in Tokyo.

Shum and Hasegawa agreed that weaker demand prospects should weigh on prices over the next two months given that top exporter Saudi Arabia has made good on its pledges to keep the oil market well supplied.

“There’s no shortage at the moment. From a fundamental point of view, Brent should soften to around $100,” said Hasegawa.

While recent employment and housing data from top oil user the United States have been relatively upbeat, the economy of No. 2 oil consumer China is, at best, on a tepid road to recovery, while Europe remains mired in a nagging debt crisis.

The Chinese economy could stage a feeble rebound in the fourth quarter on higher public infrastructure spending, although growth will remain lethargic through 2013, a Reuters poll of economists showed.