Good vibes propel crude to 3-month high

SINGAPORE: Oil traded near the highest level in more than three months as Italy started building a new government that may help contain Europe’s debt crisis and Japan reported its first economic growth in a year. West Texas Intermediate oil was little changed after rising to $99.69 a barrel, the highest level since July 26.

Italy’s president offered Mario Monti, a former European Union competition commissioner, the post of prime minister after Silvio Berlusconi resigned. The economy in Japan, Asia’s second-biggest oil user, expanded at an annualized 6% rate last quarter, the Cabinet Office said in Tokyo on Monday.

“The change in Italy over the weekend is the main reason for the markets getting a lift,” said Ole Hansen, senior manager of trading advisory at Saxo Bank in Copenhagen. “Oil has had a really good run in the last few weeks.”

Crude for December delivery was at $98.66 a barrel, down 33 cents, in electronic trading on the New York Mercantile Exchange at 9:29 am London time. Prices rose 5% last week. Brent oil for December settlement added 6 cents to $114.22 a barrel on the London-based ICE Futures Europe exchange.

The more active January contract was down 4 cents at $112.89. December futures, which expire on Tuesday, traded at a premium of $14.53 to New York crude, compared with a record $27.88 on October 14. The spread narrowed 14% last week. Japan’s economic expansion beat the median forecast of 5.9% by analysts in a Bloomberg survey.

The return to growth after three quarters of contraction was driven by companies including Toyota making up for lost output from the earthquake in March.