NEW YORK, NY – Oil prices hit a two-month high yesterday, while Brent crude slipped, as investors bet on a European debt solution and a pick-up in US petroleum demand.

New York’s main contract, West Texas Intermediate (WTI) light sweet crude for December delivery, gained US$1.90 ($162) to close at US$93.17 a barrel, its highest peak since August 2.

In London, Brent North Sea crude for December fell 34 cents to settle at US$110.92.

The New York oil rally contrasted with an equities selloff on Wall Street and in Europe on concerns that eurozone leaders would not be able to contain the contagion from sovereign debt crises in Greece, Portugal and Ireland.

Summit Energy commodity analyst Matt Smith said the oil market was “definitely betting” on a positive solution emerging from the European Union summit today.

EU leaders struggled to finalise a grand deal to end its festering debt crisis on the eve of the summit, leaving many investors cautious.

High on the oil market’s radar was the latest US weekly oil stockpiles report from the Department of Energy, slated for today, a gauge of demand in the world’s biggest oil-consuming country.

“The WTI price appears to be responding to the swift reduction of US crude stocks in past weeks, which have plunged by over 10 per cent since the end of May; the previous substantial inventory overhang has now been fully depleted,” Commerzbank analysts said in a research note.

Summit’s Smith said there was a “potential for a demand rise coming through from improving economic data.”

Traders also kept an eye on Hurricane Rina as it heads toward the Gulf of Mexico, home to major oil drilling and production.

“The current projection for the storm path is to make landfall on Mexico’s Yucatan peninsula, and is not presenting a threat to oil-producing assets in the Gulf of Mexico,” JPMorgan analysts said.

But the Commerzbank analysts said Rina, expected to hit the Gulf at the end of the week, could possibly lead to temporary production losses and a further reduction of US inventories.

AFP