SINGAPORE (Reuters) - Brent crude held steady above $113 per barrel on Tuesday as investors awaited economic growth data out of Europe to gauge the region's energy demand outlook, while escalating tensions in the Middle East supported prices.
Weak growth numbers from the euro zone could boost the dollar and weigh on commodities that are priced in the greenback.
But crude should find a floor as an intensifying debate in Israel on whether to strike Iran's disputed nuclear programme stokes worries about supply from the region.
Brent crude gained 39 cents to $113.99 a barrel by 0647 GMT, after closing 65 cents up at its highest settlement since May 3. U.S. crude gained 50 cents to $93.23 a barrel, after ending 14 cents lower.
"The immediate impact of the European growth numbers will be on the forex market and oil will react to that," said Ryoma Furumi, a commodities sales manager at Newedge Japan.
"Oil prices are high because of the Israel situation and a lot will depend on how that turns out." France's economy recorded zero growth for a third straight quarter in the three months to end-June, while German GDP grew 0.3 percent in the second quarter.
Numbers from both the euro zone powerhouses marginally exceeded expectations. The dollar has weakened so far on Tuesday, with the index <.DXY> down 0.17 percent partly due to expectations central banks will initiate more measures to stimulate growth as the global economic outlook worsens.
Investors across markets stayed cautious ahead of the data with the euro holding on to gains, base metals edging lower and gold inching up on more policy hopes.
Apart from European growth numbers, markets were also eyeing July retail sales data from the United States for an indication on the health of the world's biggest economy.
Economists in a Reuters survey expect a 0.3 percent rise compared with a 0.5 percent decrease in June.
"Investors will be looking for a positive retail sales number in July to turn around a succession of weaker months," Ric Spooner, chief market analyst at CMC Markets, said in a note.
PRICE OUTLOOK
Brent will trade between $111 and $115 a barrel unless the situation in the Middle East worsens, while the U.S. benchmark will swing in a $2-a-barrel range, Newedge's Furumi said.
Apart from tensions in the Middle East, a fall in North Sea production of about 17 percent in September from August, mainly due to a drop in Forties crude output may also support the European benchmark.
Analysts at ANZ said in a daily note that Brent may stabilize in a $110-115 range, with the increase in tension in the Middle East or a steeper decline in North Sea output bringing "the $120 technical target into play".
Brent looks neutral in a range of $113.14-$114.68 per barrel, according to Reuters market analyst Wang Tao, with any escape pointing to future direction. He added that U.S. oil was biased to fall more to its August 10 low of $91.71.
U.S. CRUDE STOCKS
U.S. crude stocks data due later in the day from industry group the American Petroleum Institute (API) should also provide pointers on demand growth in the world's largest oil consumer.
U.S. crude stockpiles were forecast to have fallen by 1.6 million barrels in the week to August 10, declining for a third straight week on lower imports, a preliminary Reuters poll of seven analysts showed on Monday.
The API data will be followed by more closely watched numbers from the U.S. Energy Department on Wednesday.
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Weak growth numbers from the euro zone could boost the dollar and weigh on commodities that are priced in the greenback.
But crude should find a floor as an intensifying debate in Israel on whether to strike Iran's disputed nuclear programme stokes worries about supply from the region.
Brent crude gained 39 cents to $113.99 a barrel by 0647 GMT, after closing 65 cents up at its highest settlement since May 3. U.S. crude gained 50 cents to $93.23 a barrel, after ending 14 cents lower.
"The immediate impact of the European growth numbers will be on the forex market and oil will react to that," said Ryoma Furumi, a commodities sales manager at Newedge Japan.
"Oil prices are high because of the Israel situation and a lot will depend on how that turns out." France's economy recorded zero growth for a third straight quarter in the three months to end-June, while German GDP grew 0.3 percent in the second quarter.
Numbers from both the euro zone powerhouses marginally exceeded expectations. The dollar has weakened so far on Tuesday, with the index <.DXY> down 0.17 percent partly due to expectations central banks will initiate more measures to stimulate growth as the global economic outlook worsens.
Investors across markets stayed cautious ahead of the data with the euro holding on to gains, base metals edging lower and gold inching up on more policy hopes.
Apart from European growth numbers, markets were also eyeing July retail sales data from the United States for an indication on the health of the world's biggest economy.
Economists in a Reuters survey expect a 0.3 percent rise compared with a 0.5 percent decrease in June.
"Investors will be looking for a positive retail sales number in July to turn around a succession of weaker months," Ric Spooner, chief market analyst at CMC Markets, said in a note.
PRICE OUTLOOK
Brent will trade between $111 and $115 a barrel unless the situation in the Middle East worsens, while the U.S. benchmark will swing in a $2-a-barrel range, Newedge's Furumi said.
Apart from tensions in the Middle East, a fall in North Sea production of about 17 percent in September from August, mainly due to a drop in Forties crude output may also support the European benchmark.
Analysts at ANZ said in a daily note that Brent may stabilize in a $110-115 range, with the increase in tension in the Middle East or a steeper decline in North Sea output bringing "the $120 technical target into play".
Brent looks neutral in a range of $113.14-$114.68 per barrel, according to Reuters market analyst Wang Tao, with any escape pointing to future direction. He added that U.S. oil was biased to fall more to its August 10 low of $91.71.
U.S. CRUDE STOCKS
U.S. crude stocks data due later in the day from industry group the American Petroleum Institute (API) should also provide pointers on demand growth in the world's largest oil consumer.
U.S. crude stockpiles were forecast to have fallen by 1.6 million barrels in the week to August 10, declining for a third straight week on lower imports, a preliminary Reuters poll of seven analysts showed on Monday.
The API data will be followed by more closely watched numbers from the U.S. Energy Department on Wednesday.
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