Oil rose nearly $2 and topped $108 a barrel on Wednesday, bouncing from its 2.5 percent decline a day earlier, as forecast of a drop in US crude stocks more than offset doubts about the US government's financial rescue plan. A dip in the US dollar as well as renewed confidence from Warren Buffett's surprise $5 billion investment in Goldman Sachs lent support to oil prices.
US light crude for November delivery rose $1.72 or 1.6 percent to $108.33 a barrel by 0740 GMT, after settling down $2.76 at $106.61 on Tuesday. London Brent crude rose $1.62 or 1.6 percent to $104.70. "There could be some improved sentiment but I suspect people are largely being cautious ahead of the release of the EIA data and don't want to be caught short," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
A Reuters poll of analysts ahead of weekly US government inventory data due later on Wednesday forecast that crude stocks fell for the fifth consecutive week due to disruptions caused by Ike. Distillate stocks were forecast to have fallen by 1.5 million barrels, with gasoline stocks expected to have dropped for the ninth straight week by 4 million barrels after Ike shut Gulf Coast refineries, according to a Reuters poll of analysts.
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