Robust US economic data sent Brent crude oil prices upward, but conflicting data and uncertainty in the eurozone mitigated gains. The commodity traded at 108.94 at 8:02 GMT on Wednesday morning as the demand outlook began to brighten.
Reuters, reported that US home prices had their biggest yearly gain in over six years in January, which fueled speculation that the number one oil consumer picked up speed early in the first quarter of 2013.
Data that showed US durable goods orders soared in February added to this sentiment and pushed Brent prices toward $109.
However, gains from the positive data were capped after Tuesday's figures for American consumer confidence showed a sharp drop. Following heated debates between Republicans and Democrats in Washington, the “sequester”, or $85 billion worth of government spending cuts, created uncertainty in the nation. Now, Americans are worrying about the fallout from these cuts, which has caused the data's decline.
The strict bailout terms in Cyprus are also weighing on Brent prices after eurozone officials confirmed that the Cypriot bailout could set a precedent for future bank restructures. Many are worried about the region's financial stability, especially if capital flight in response to Cyprus' bailout spreads to other nations like Spain and Italy.
As Cypriot banks prepare to reopen at the end of the week, investors will be watching Spanish, Italian, and German bonds to see what effects the uncertainty in Cyprus will have on the rest of the bloc.
Although European growth is slowing, many analysts believe that the positive US economic data will outweigh problems in the eurozone and ease some of the commodity's price pressure.
Moving forward, investors will be watching for data from the US Energy Information Administration, expected later on Wednesday afternoon.
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