Oil prices were up slightly to US$101 a barrel Wednesday on expectations that U.S. lawmakers will pass a revised bank bailout plan that they rejected earlier this week.
By midday in Europe, light, sweet crude for November delivery was up 36 cents to US$101 a barrel in electronic trading on the New York Mercantile Exchange. Overnight, oil rose US$4.27 to settle at US$100.64.
Wednesday's session continued to show the price swings and frequent reversals in direction seen in previous days. The Nymex contract was trading between a high of US$102.84 and a low of US$100.57.
"In a low volume environment, the intraday volatility (of the Nymex contract) remains extremely high," said Olivier Jakob of Petromatrix in Switzerland.
In London, November Brent crude rose 10 cents to US$98.27 a barrel on the ICE Futures exchange.
U.S. Senate leaders scheduled a vote for Wednesday on a version of the emergency bill that adds substantial tax cuts meant to appeal to Republicans when it reaches the House of Representatives. The House rejected a similar US$700 billion plan Monday by a vote of 228-205.
But traders were skeptical a bailout of bad mortgage debt would quickly reverse slowing global economic growth and weakening demand for crude.
"It would be good news to avoid further turmoil, but it's too early to assume a new package would lead to a recovery in the U.S.," said Tetsu Emori, commodity markets fund manager at ASTMAZ Futures Co. in Tokyo.
A slump in energy demand has accelerated in Asia. In India, domestic oil product sales totaled 2.41 million barrels per day in August, the lowest level this year, according to Barclays Capital research. In the same month, Japan's oil demand fell by 8.4 percent.
Investors also have an eye on the weekly oil inventories report to be released later Wednesday from the U.S. Energy Department's Energy Information Administration.
The petroleum supply report was expected to show that oil stocks rose as much as 1.5 million or fell as much as 1.5 million barrels, according to the average of analysts' estimates in a survey by energy information provider Platts.
The Platts survey also showed that analysts projected gasoline inventories fell between 1 million and 3 million barrels and distillates went down between 1 million and 2 million barrels last week.
"I'm pessimistic," Emori said. "I think the U.S. is already in a recession."
In other Nymex trading, heating oil futures rose 1.25 cents US$2.9072 a gallon, while gasoline prices gained 0.27 cent to US$2.4604 a gallon. Natural gas for November delivery rose 9.6 cents to US$7.534 per 1,000 cubic feet.
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Associated Press writer Alex Kennedy in Singapore contributed to this report.
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