World oil prices rebounded this evening as traders shrugged off mixed US energy inventories to focus on media speculation over potential new stimulus measures from the Federal Reserve.
Brent North Sea crude for April rallied $1.52 to $123.50 a barrel in London trade. New York's main contract, West Texas Intermediate (WTI) or light sweet crude for April, gained $1.11 to $105.81.
Crude futures had fallen sharply yesterday, shedding about $2 on the back of worries over Greece's massive bail-out deal and dimmer economic growth prospects in China and Europe.
The Federal Reserve is weighing a new bond-buying programme designed to boost the US economy while not adding to inflationary pressures, the Wall Street Journal reported today.
The US central bank's possible new approach to stimulus would involve creating fresh money to buy Treasury bonds and long-term mortgage securities, as it has done in previous "quantitative easing" programmes, the newspaper said.
The energy market also remained underpinned by ongoing concerns surrounding major crude producer Iran. Israeli leader Benjamin Netanyahu left Washington yesterday with assurances that the US is prepared to use force to prevent Iran from getting a nuclear weapon, just not yet.
Netanyahu, who met with President Barack Obama on Monday and Secretary of State Hillary Clinton on Tuesday, put the world on notice that his patience was wearing thin and, if necessary, he would launch unilateral strikes. Iran has repeatedly denied that it is building an atomic bomb, saying its nuclear programme is for peaceful purposes.
Crude futures also rebounded today on upbeat US jobs data but traders were still cautious ahead of the deadline for Greece to seal its debt writeoff deal. Analysts credited a rising sense of confidence that Greece would get the necessary level of private investors to sign on to its €107 billion debt write-off and swap plan by tomorrow night's deadline.
In Europe, investors are hoping enough of private creditors owed money by Greece will sign up for the debt swap, the success of this private debt swap is a key condition for a €130 billion rescue package.
Separately, the US Department of Energy said crude inventories grew by 800,000 barrels in the week to March 2. That was smaller than expectations for an increase of 1.1 million barrels. Petrol stocks fell 400,000 barrels, which was far lighter than predictions of a 1.4-million-barrel drop.
