Oil above $102 on US budget hopes, Libyan incident

PABLO GORONDI, Associated Press

By early afternoon in Europe, benchmark oil for November delivery was up 42 cents to $102.03 a barrel in electronic trading on the New York Mercantile Exchange. The contract for the benchmark grade fell $1.88 to close at $101.61 on Wednesday.

President Barack Obama will meet with top House Republicans at the White House to seek a deal to raise the government's debt limit in the short term to prevent the first default on U.S. debt next week. Such a default could have a devastating effect on the global economy — and therefore for energy demand — so hopes of a deal underpinned crude prices.

Meanwhile, investors were monitoring developments in Libya, where Prime Minister Ali Zidan was abducted by gunmen from the hotel where he resides. He was freed hours later, but the event reminded markets of the risk to supplies from key crude producers in the region.

In the U.S., however, supplies remain high. The Energy Department said crude stocks rose by 6.8 million barrels last week, more than three times over analysts' expectations, at a time of year when consumption is seasonally weak.

Demand is not expected to grow, either. In its latest monthly report, the Organization of the Petroleum Exporting Countries kept its main forecasts for oil consumption unchanged since last month. It estimates global crude demand at 89.7 million barrels a day in 2013.

Demand for OPEC's own crude is seen at 29.9 million barrels a day this year — that is 500,000 barrels a day less than in 2012 and is estimated to fall further to 29.6 million barrels a day in 2014.

Brent, the benchmark for international crudes, rose 45 cents to $109.51 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline rose 2.93 cents to $2.6523 per gallon.

— Natural gas surged 8.7 cents to $3.766 per 1,000 cubic feet.

— Heating oil added 1.71 cents to $3.0345 per gallon.