Oil higher ahead of ECB meeting

I / Singapore September 06, 2012, 9:18 IST

Oil was higher in Asian trade today with investors hopeful that a European Central Bank meeting will yield fresh measures to resolve the euro zone's stubborn financial woes, analysts said.

New York's main contract, light sweet crude for October delivery, rose 68 cents to $96.04 a barrel and Brent North Sea crude for delivery in October was 44 cents higher at $113.53.

Financial markets are looking to Thursday's European Central Bank (ECB) meeting, with all eyes on president Mario Draghi.

Draghi in July hinted at a restart of the ECB's sovereign bond-buying programme to help under-pressure euro zone nations suffering high borrowing costs.

Expectations were further stoked on Monday after European lawmakers said Draghi had told them that buying government bonds of up to three-year maturity on the secondary market did not amount to bailing out spendthrift euro members.

But some analysts cautioned that any announcements by the ECB might fall short of investor expectations.

"Markets will only be happy with an unlimited pledge to buy bonds from weak economies, but we feel this won't be on the cards today," analysts from IG Markets Singapore said in a report."

Specific yield targets or caps are also unlikely as the ECB will want room for manoeuvre.

"Instead we think the governing council will signal its intention to steer short-dated government debt towards levels it deems consistent with fundamentals."