The price of oil rose above $96 a barrel on Thursday ahead of a meeting of the European Central Bank which is expected to announce a plan to help ease the eurozone's debt crisis.
The ECB is expected to announce a bond-buying program to reduce high borrowing costs in Spain and Italy. That could lower their chances of needing an emergency bailout, ease concerns about their economies and translate into growth and more demand for energy.
By early afternoon in Europe, benchmark crude for October delivery was up $1.10 to $96.46 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 6 cents to end at $95.36 per barrel in New York on Wednesday.
In London, Brent crude was up 84 cents at $113.93 on the ICE Futures exchange.
“Oil prices are likely to make further gains” if the ECB announcement is in line with market expectations, said a report from analysts at Commerzbank in Frankfurt.
Manufacturing weakness in China and the U.S. has sparked fears of a global economic slowdown. But such concerns are being countered by pledges of action by central banks and governments to promote global economic growth.
Expectations for ECB action have been high since the bank's president, Mario Draghi, said in July that the bank will do whatever it takes to save the euro currency.
Carl Larry, president of Oil Outlooks and Opinions, said he believes crude was at the right price.
“WTI (West Texas Intermediate crude) has not just struggled to get over $100 it has struggled to get back under $90 ... perhaps WTI is right where it should be at $95,” Larry said. WTI is used to price oil produced in the United States.
Expectations of a large decrease in U.S. stockpiles of crude and refined products also supported prices.
In other energy futures trading, heating oil rose 1.84 cents to $3.136 per gallon. Wholesale gasoline rose 2.7 cents to $2.9768 per gallon. Natural gas fell 0.5 cent to $2.79 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.