* Brent steady as IMF improves global growth forecast
* Decent Spanish bond sale also boosts sentiment
* Rise in investor confidence in Germany helps
* Coming up: EIA to release inventory data at 1430 GMT
By Jessica Jaganathan
SINGAPORE, April 17 (Reuters) – Brent crude futures held
steady above $118 on Wednesday as concerns on the euro zone
crisis eased after a successful Spanish debt auction and a
better growth forecast from the International Monetary Fund.
The IMF offered a cautiously optimistic view on global
growth, which it said is slowly improving as the U.S. recovery
gains traction and dangers from Europe recede.
While the euro zone will suffer a mild recession, the IMF
said it would be less severe than feared after moves to calm
markets at the turn of year.
Brent June crude slipped seven cents to $118.71 a
barrel by 0446 GMT, after settling higher at $118.78 in the
previous session.
U.S. May crude gained 18 cents to $104.38, after
settling at its highest close since April 2. The May contract
expires on Friday.
“Traders’ risk appetite improved after the successful debt
auction, IMF increasing global growth forecast and good data
from Germany,” said Natalie Robertson, an analyst at ANZ.
“Going forward, the crude market will trade sideways with a
potential increase in demand in July once the refineries are
back from maintenance.”
Spanish bond yields, which have surged in recent days on
concerns about the country’s economy, eased back as Tuesday’s
better-than-expected bill sale brightened the mood. Traders held
back their optimism, however, as Spain faces a far more
significant challenge on Thursday, with the sale of longer-term
bonds.
The IMF also appeared to be inching toward a deal on
increasing its financial firepower on Tuesday, with Japan,
Sweden and Denmark committing a total of $77 billion to help
contain the euro zone’s debt crisis.
Also boosting sentiment, a survey in Germany, Europe’s
biggest economy, showed an unexpected rise in analyst and
investor confidence in April.
BRENT/WTI SPREAD
Brent’s premium to U.S. crude narrowed by 24
cents to below $13.90 a barrel as investors continued to price
in Monday’s news that the Seaway pipeline’s crude oil flow will
be turned around towards the Gulf Coast as early as mid-May.
This will likely help to alleviate a supply glut in the
United States, with crude oil stocks rising more than expected
to 3.4 million barrels, a weekly report from industry group the
American Petroleum Institute showed.
“I think the market is pricing in the reversal of the
pipeline plan on the U.S. crude, while the receding Iranian risk
premium is impacting Brent more quickly than WTI,” said
Robertson.
The EIA will release its own inventory data on Wednesday at
10.30 a.m. EDT (1430 GMT).
MIXED DATA
Improving sentiment for U.S. prices, new permits for home
construction surged to their highest level in 3-1/2 years, which
could lead to more housing construction in coming months,
supporting the economic recovery.
But gains were capped with other data showing that
manufacturing output in March slipped for the first time in four
months, dropping 0.2 percent, and falling short of analyst
expectations.
The IMF cautioned that while the United States is gradually
gaining momentum, should the euro zone crisis erupt once more,
it could trigger a widespread dumping of risky assets.
The IMF lifted its forecast for the United States to 2.1
percent growth this year, up from 1.8 percent in January. For
2013, it nudged up the forecast to 2.4 percent from 2.2 percent.
It sees unemployment this year holding at its current level of
8.2 percent and inching down in 2013 to 7.9 percent.
Latest data out of China showed a slowdown in real estate
market, with home prices falling in March from a year ago,
triggering concerns among some investors on downward risks for
the world’s No. 2 economy.
