Brent crude oil began Tuesday on a high after news from Japan restored investors' confidence in the global economy. The commodity reached above $112 to trade at 112.02.
Japan, the world's third largest economy, has announced it will be injecting more money into its stalled economy in its most aggressive effort to restore growth to date. The country has not yet decided how to deal with its nuclear reactors, which wreaked havoc on the Fukushima plant when they were damaged in the 2011 earthquake. The decision of whether to restore the reactors will have a large effect on the country's future energy demand.
Compounding the optimistic outlook for global economic growth was data from China, which claimed the country's oil consumption would increase. According to Reuters, Barclays Capital analysts are expecting Chinese oil demand to increase from 330,000 barrels per day in 2012 to 460,000 bpd in 2013. The increased demand is attributed to higher consumption of gasoline within the country as well as an increase in exports.
Brent prices are also finding support in the uncertainty surrounding the US debt ceiling, which will move into the spotlight over the next few weeks. After a heated battle about the country's fiscal cliff, many are expecting to see a similar last minute decision with the upcoming debt ceiling.
Also bolstering prices is unsettling tension in Algeria where 38 foreign hostages were killed in a gas plant raid. The Algerian prime minister recently pledged to resist the Islamist uprising in the Sahara. The incident in Algeria has prompted energy fields in the region to ramp up security, something that makes investors wary.
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