SINGAPORE Oil rose more than $1 a barrel to above $100 a barrel on Thursday as markets awaited a U.S. vote on a highly-anticipated financial rescue plan and bet on a positive outcome.
Eyes were on the U.S. Senate, expected to vote on a new version of the $700-billion rescue package for Wall Street, rekindling hopes that the credit crisis can be eased before claiming yet more banks and causing further damage to the global economy.
U.S. light crude for November delivery rose $1.71 to $100.24 by 0104 GMT, after having settled down a hefty $2.11 at $98.53 on Wednesday when U.S. government data showed supplies rising and on a firmer dollar.
London Brent was up $1.70 at $97.03.
"The fact that oil prices are up a dollar and that the U.S. dollar is firmer shows that the market is already pricing in a positive outcome," said Mark Pervan, senior commmodity strategist at Australia and New Zealand bank based in Melbourne.
Oil prices have tumbled from record highs above $147 a barrel in July on signs of slowing oil demand from industrial economies.
Pressure has also come as investors sell oil and other commodities and move cash into safer investments amid turmoil in financial markets.
But growing supplies in the U.S. put a cap on possible gains, he added.
"You have to look at the supply side, too. Supplies have been very tight in the U.S, but we now see a restart of supplies."
U.S. crude oil inventories rose by 4.3 million barrels last week, data from the Energy Information Administration showed, as output from the Gulf of Mexico continued to recover from disruptions caused by Hurricane Ike.
Gasoline inventories showed a surprise 900,000-barrel rise as more refinery capacity came back online following the storm, which caused the worst disruption to the U.S. energy sector since the 2005 hurricane season.
Traders have kept a close watch on the slow recovery of U.S. oil infrastructure after Hurricane Ike hit the oil-rich U.S. Gulf of Mexico on Sept. 13.