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Oil hovers above $91 ahead of Europe debt plan

business Updated: Oct 25, 2011 09:49 IST

Oil prices hovered above $91 a barrel on Tuesday in Asia as investors await details of Europe's plan to contain its debt crisis.

Benchmark crude for December delivery was up 17 cents at $91.44 a barrel at midmorning Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $3.87, or 4.4%, to settle at $91.27 in New York on Monday.

Brent crude was down 20 cents at $111.25 a barrel on the ICE Futures Exchange in London.

Oil has jumped 21% in three weeks amid growing investor optimism that European leaders will devise a plan to limit the damage from a possible default of Greek sovereign debt. Details of the plan are expected to be announced on Wednesday.

"Although the euro zone debt issue remains quite murky, the market appears to be pricing in a viable resolution to this crisis," energy consultant Ritterbusch and Associates said in a report. "Wednesday's EU summit could still bring some bearish news if a comprehensive debt plan is not forthcoming."

Crude has also rebounded this month because of signs global economic growth may not slow as much as some investors had previously expected. China, which has led global commodity demand growth in recent years, said Monday manufacturing likely improved in October from September.

Last week, China said its economy grew 9.1% in the third quarter.

"We continue to grow more positive on the outlook for China's commodity import demand over the remainder of the year," Barclays Capital said in a report.

"Improving evidence from the macroeconomic front for October are in line with our soft landing assumptions."

In other Nymex trading, heating oil fell 1.1 cents to $3.04 per gallon and gasoline futures slid 1.0 cent at $2.66 per gallon. Natural gas was steady at $3.61 per 1,000 cubic feet.