Oil rises above $113, heads for second monthly gain

LONDON (Reuters) - Oil rose above $113 a barrel on Friday, heading for a second monthly gain, supported by investor hopes of more monetary easing that could spur economic growth and support oil demand, and concern about supplies.

Federal Reserve Chairman Ben Bernanke may acknowledge the U.S. central bank is actively considering another round of monetary easing in his Jackson Hole speech due to begin at 1400 GMT.

Brent crude was up 55 cents to $113.20 a barrel by 1234 GMT, after falling to a session low of $112.36 earlier. U.S. crude added 82 cents to $95.44.

"The crude oil markets are treading water in the run-up to the eagerly-awaited Jackson Hole conference," said Eugen Weinberg, analyst at Commerzbank. "If the statements made by Bernanke prove disappointing, oil prices could come under pressure."

The dollar weakened ahead of the speech by the Fed chief, which could disappoint markets if he stops short of signaling another bond-buying program is imminent, an outcome which many analysts say is a strong possibility.

Besides stimulus hopes, a drop in supply from the North Sea, source of the crude which underpins the Brent contract, due to oilfield maintenance as well as fighting in Syria and tension over Iran's nuclear program also lent support.

"Fundamentally, the market could come down, but there is this general fear factor around Iran, Syria, Israel and hurricanes which is not going to go away any time soon," said Tony Machacek, a broker at Jefferies Bache.

"Also, the euro has managed to stabilize, which has maybe helped oil creep higher. Short-covering before the weekend could also keep the market buoyant."

A U.N. report said on Thursday Iran had doubled the number of uranium enrichment centrifuges it has in an underground bunker, showing Tehran has expanded its nuclear work despite Western pressure and the threat of an Israeli attack.

Traders were keeping an eye on the prospect of another strike in Norway, just weeks after a walkout by oil production workers lasted 16 days and stopped 13 percent of Norway's oil production.

Norwegian oil drilling workers may strike on Sunday at drilling installations operated by KCA Deutag in two North Sea fields, but production will not be affected, a union leader said on Friday.

Other threats to supplies receded. The remnants of Hurricane Isaac, now downgraded to a tropical depression, were seen as posing no further threat to most oil and gas installations in the region.

The Gulf of Mexico oil and gas industry has so far reported no major storm-related damage to infrastructure although one Louisiana refinery had flooding. Energy production was expected to start ramping up again.

Also easing concern about supply in the near term, a Reuters survey on Thursday found Iranian oil shipments rose slightly in August, contributing to an increase in OPEC output mainly driven by exports from Angola and Nigeria.

(Additional reporting by Jessica Jaganathan; Editing by William Hardy and Alison Birrane)

Source: http://news.yahoo.com/brent-steady-above-112-ahead-bernanke-speech-set-032505677--finance.html

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