LONDON: Brent crude oil prices rose on Wednesday after Japan's central bank became the latest country to further open the monetary taps to help stimulate its economy.
Following similar action by the U.S. Federal Reserve, Japan, the world's third biggest oil consumer said it would boost asset purchases in the face of a slowing global economy, spurring hopes that other central banks would follow suit.
Brent November crude rose 22 cents to $112.25 a barrel by 0910 GMT.
U.S. October crude was up 31 cents at $95.60 a barrel. The contract expires on Thursday. U.S. November crude rose 28 cents to $95.90 a barrel.
The move by the Bank of Japan helped oil prices reverse some of the losses in the previous two sessions fuelled by concerns over demand and signs that top oil exporter Saudi Arabia was pumping more oil to bring down prices.
"We've had a bit of a recovery after a steep fall and we're seeing the beneficial effect of the Japanese money printing, and perhaps optimism about the effects of the U.S. move," said Christopher Bellew at Jefferies Bache.
The Bank of Japan expanded its asset buying and loan programme, currently its primary monetary easing tool, by 10 trillion yen ($127 billion) to 80 trillion yen, with the rise meant for purchases of government bonds and treasury discount bills.
Wednesday's price gains, if sustained, will worry oil producers, particularly members of OPEC, who are working to boost supply to bring down prices.
On Tuesday, a senior OPEC Gulf source said Saudi Arabia was pumping around 10 million barrels per day (bpd) and would take action to keep prices around $100.
"Clearly after the rally from last week, it is easy to understand why Saudi Arabia was keen to send a message to the market that it would be acting to lower oil prices," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Brent has gained around 27 percent since hitting a 2012 low of $88.49 in June as investors have worried about the security of supply from the Middle East and North Africa and on expectations for commodity prices to rise on economic stimulus moves by the United States, Europe and China.
EYES ON CHINA, U.S. DATA
Attention will turn at 1430 GMT to the Energy Information Administration data showing inventory levels in the United States, to give an indication on the demand/supply dynamics.
Crude and distillate stocks were expected to be up 1.0 million barrels, with gasoline inventories up 1.2 million barrels, a Reuters survey of analysts taken ahead of weekly reports showed.
After Japan, investor focus turns to China, the world's second-largest oil consumer, with a preliminary reading of its manufacturing activity for September set for publication on Thursday, along with similar data from the United States and Europe.
"I'm not expecting to see any change in the trend of the past few months, things are likely to get worse before they get better," Spooner said.
"The anticipation is that the Chinese economy is going to remain weak and it's going to take some time before we start to see a turnaround."
Investors are also continuing to fret over Europe's debt crisis with concern growing that Spain, which is at the heart of the euro zone debt crisis, is unable to lower its massive public deficit and control its soaring debt. AGENCIES