LONDON — Brent crude oil rose above $112 a barrel on Thursday, supported by renewed confidence that major central banks would keep taking steps to support the global economy.
Brent crude for April delivery gained 19c to $112.06 a barrel by 9.28am GMT, after earlier rising to $112.34.
It slipped to $111.65 on Wednesday, its weakest since January 22.
The benchmark crude is still down 2.8% this month, on track for its steepest monthly drop since October.
US oil fell 19c to $92.67 but was on track for an almost 5% drop this month, after three straight monthly gains.
Strong demand for Italian debt that calmed concern about its political deadlock also boosted appetite for riskier assets like oil, equities and other commodities.
European Central Bank (ECB) chief Mario Draghi reiterated on Wednesday that the bank would continue injecting liquidity into markets.
Appearing before a congressional panel for a second straight day on Wednesday, comments from US Federal Reserve chairman Ben Bernanke were seen as implying the US central bank would maintain its bond-buying strategy to support the US economy.
Oil hit its lowest in over a month on Wednesday, with analysts pointing to a switch in strategy by speculators, but the more optimistic outlook saw them return to the commodity.
"It’s hard to resist the stronger equities and more positive mood in Europe, so for the short term it should be bullish," SEB analyst Bjarne Schieldrop said in Oslo.
Longer term, he said, there were bearish factors that were likely to keep a cap on strength.
One potential drag could come from political deadlock on the US budget.
Without a deal from the White House and Republicans to prevent it, $85bn will be slashed from the US budget starting on Friday, which President Barack Obama warned could shave at least 0.6 percentage points off economic growth.
Despite Mr Bernanke’s reassurance, investors remain cautious over the prospect of a dramatic rise in demand from the US, the world’s top oil consumer, with its inventories of crude oil rising for a sixth straight week last week.
"While confidence is high, there are still risks present. Negative political news from Italy may provide headwinds, while the looming March 1 deadline for the US sequester could trigger $85bn of across-the-board budget cuts," CMC Markets sales trader Miguel Audencial said.
Concern about Iran’s nuclear ambitions has helped to support oil prices, but on Wednesday Iran gave an upbeat assessment of two-day talks with six world powers that ended with an agreement to meet again in Istanbul in March.
"The outcome was as good as you could expect it to be, so that is fairly bearish (for the oil price), and there is unlikely to be any disappointment until the next meeting," SEB’s Mr Schieldrop said.