Oil futures rose slightly Wednesday as U.S. equities pointed to a higher open, but traders remained hesitant to lay big bets without further clarity on the situation in Libya.
Light, sweet crude for October delivery rose 21 cents, or 0.2%, to $85.64 a barrel on the New York Mercantile Exchange, after remaining nearly unchanged during early European trading hours. Brent crude on ICE Futures Europe traded up 76 cents, or 0.7%, to $110.06 a barrel.
Market participants took cues early Wednesday from equity markets, which many traders have come to see as a gauge of broader economic sentiment in the absence of fresh fundamental news. U.S. stock futures turned higher, reversing earlier losses, as demand for durable goods rose last month.
"This initial move was tied to the turnaround in the Dow Jones futures," said Darin Newsom, analyst at Telvent DTN. "We seem to see this intermarket play going on right now."
Dow Jones Industrial Average futures rose 4 points to 11145, after falling 83 points prior to the data. Orders for factory goods rose by 4% from the prior month to $201.45 billion, according to the Commerce Department, an upbeat signal on the fragile U.S. economy. The market was expecting a 2% rise.
Oil futures rose to their highest level in nearly a week on Tuesday, on the back of a broad equity-market rally.
Still, oil prices could quickly come under selling pressure at the first sign of a resumption of oil exports from Libya. Rebel forces made strides toward securing Tripoli on Tuesday, capturing the compound of Col. Moammar Gadhafi. However, the Libyan strongman was nowhere to be found and AFP reported fresh firefights near Gadhafi's compound early Wednesday.
Oil prices haven't moved lower, as many have expected, in the wake of Tripoli's swift capture by Libya's rebels. Many market participants appear to be waiting on the sidelines for more concrete reports on the state of the country's oil infrastructure and for signs of the first oil shipments. Many oil companies have said they have no time frame for returning to Libya, and analysts have said it could take months for the oil to begin flowing again.
Still, with Libya now in rebel hands, many investment banks have already cut their forecasts for crude-oil prices for 2012. The country exported 1.3 million barrels of oil a day prior to the outbreak of conflict in February, and the supply disruption has kept oil prices--especially those of Brent crude, the European benchmark--elevated.
Later Wednesday, attention will likely shift to the U.S., as the Department of Energy releases its weekly survey of U.S. oil and fuel inventories. Analysts expect the report, due at 10:30 a.m. EDT, to show oil inventories last week rising 1.3 million barrels, according to a survey by Dow Jones Newswires. Gasoline inventories are seen falling 900,000 barrels, while stocks of distillates, including heating oil and diesel, are expected to rise 700,000 barrels.
Front-month September reformulated gasoline blendstock, or RBOB, recently traded down 0.45 cent, or 0.2%, to $2.8721 a gallon. September heating oil traded up 1.75 cents, or 0.6%, to $2.9600 a gallon.