* Fundamentals, financial outlook point to lower prices
* Short covering ahead of expiry supports Brent
(Adds quotes, central bank buying, updates prices)
By Claire Milhench
LONDON, Sept 15 Oil traded at over $115 on
Thursday, boosted by reports of fresh liquidity injections by
central banks in the fourth quarter, a weaker dollar and short
covering ahead of the Brent contract's expiry.
The European Central Bank said it had decided, in
conjunction with the U.S. Federal Reserve, the Bank of England,
the Bank of Japan and the Swiss National Bank, to conduct three
U.S. dollar liquidity-providing operations in
the last three months of the year.
The move helped the market shrug off a raft of bearish data
from the United States, including higher-than-expected weekly
jobless claims and a contraction in New York state manufacturing
for the fourth month in a row.
Brent crude LCOc1 for October, which expires today, was up
$2.72 at $115.12 by 1345 GMT. The November contract LCOc2 was
up $2.94 at $112.59. U.S. crude CLc1 was up 59 cents to $89.50
ICE gasoil was leading the market, however, up 3.39 percent
at $953.25 a tonne, with the October/November backwardation
widening out to $4.25.
The oil market is taking some support from European stocks
, which rose on Thursday as backing for Greece and a
smooth debt auction in Spain soothed investor fears over the
fate of the euro zone .
"A level of short term or temporary stability seems to be
arising around Europe," said Dominick Chirichella an analyst at
the Energy Management Institute. "The fact that the bottom is
not falling out in Europe has resulted in a multiday short
covering or relief rally in equities as well as the euro."
Other analysts suggested that short covering so close to
resistance levels would bring day traders in to push the market
Volatility in Brent has been accentuated by the imminent
expiry of the October contract, with the liquidity now all in
the November contract.
From a fundamental perspective, Brent has been supported by
reports that shipments of North Sea Forties crude oil are likely
to be further delayed following lower-than-expected production
at Nexen's Buzzard oil field .
A weaker dollar is also helping, with the U.S. currency
down 0.66 percent against a basket of currencies by 1344
GMT. A weaker dollar makes oil cheaper for those using other
But analysts said the upside in crude would be fairly
limited until the Eurozone crisis plays out.
World Bank President Robert Zoellick said on Wednesday the
world had entered a new economic danger zone and Europe, Japan
and the United States all needed to make hard decisions to avoid
dragging down the global economy.
"The market at some point will have to come to the
conclusion that the growth prospects which have been priced into
Brent are unrealistic," said Eugen Weinberg, an analyst at
"The U.S. Federal Reserve meeting next week is unlikely to
bring a new round of quantitative easing in the form of direct
Europe's finance ministers have been warned confidentially
of the danger of a renewed credit crunch as a "systemic" crisis
in euro zone sovereign debt spills over to banks.
Swiss bank UBS was under pressure after it
said a trader had lost it around $2 billion in unauthorised
deals, and police in London arrested 31-year-old Kweku Adoboli
in connection with the case.
(Additional reporting by Alejandro Barbajosa in Singapore;
Editing by William Hardy)