Oil rises on expectations of new ECB bond program

Reuters: Oil futures rose above $114 per barrel on Thursday, buoyed by expectations the European Central Bank will manage to ease its debt crisis with a new programme of bond purchases.

Europe’s debt crisis and slowing global economic growth have fuelled worries about the demand outlook for commodities.

Investors hope a new ECB bond-buying programme will help cut the borrowing costs of Spain and Italy, allowing the euro zone economy to begin to recover from recession.

The ECB’s Governing Council began meeting at 0700 GMT to discuss the new bond plan.

Brent crude futures climbed $1.10 to $114.19 a barrel by 0900 GMT. U.S. crude gained $1.08 to $96.44.

Lending further support to oil prices, U.S. crude stocks fell sharply last week as Hurricane Isaac’s passage through the Gulf of Mexico shut in production and closed ports, data from the industry’s American Petroleum Institute showed.

Crude inventories fell by 7.2 million barrels in the week to August 31, a much steeper drop than analysts’ expectations for a drawdown of 5.3 million barrels.