Oil advanced on Friday on strong U.S. consumer sentiment and upbeat readings on the Chinese economy, while gasoline futures surged more than 3 percent on speculation over delivery problems and tight supplies in storm-hit New York harbor.
The harbor, delivery point for the NYMEX gasoline contract, was still in flux 11 days after Superstorm Sandy struck the U.S. Northeast. Many local terminal operations remained constrained, refineries were shut and the retail supply chain was still squeezed. New York City began rationing gasoline for the first time since the 1970s.
Speculation about possible delays in delivering gasoline against the expired November RBOB contract overshadowed broader economic issues, such as concerns over Europe's debt woes and the "fiscal cliff" facing the United States.
Brent December crude stood at $109.14 a barrel at 1:55 p.m. EST (1855 GMT) after rising as high as $109.78 earlier in the day, on track to snap a string of three weekly declines but still depressed by a host of macro-economic worries.
"The market is still just hovering above its four-month lows," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
U.S. December crude was up 95 cents at $86.04 a barrel after dropping to $84.13 during the session.
But U.S. gasoline stole the show, with the December contract rising more than 8 cents, or 3 percent, to $2.689 a gallon.
RBOB was buffeted by continuing supply tightness around New York harbor after Sandy, but brokers and traders also said concerns about delivery against the NYMEX November contract pushed gasoline higher.
U.S. 'FISCAL CLIFF'
After initially receiving a boost from strong U.S. consumer sentiment, equities on Wall Street pared their gains after President Barack Obama announced he was "open to compromise" in upcoming negotiations with Congress over the "fiscal cliff."
Investor caution remains over concerns that the world's top oil consumer, the United States, is at risk of tipping into recession if it fails to find a compromise to cut its deficit before nearly $600 billion worth of spending cuts and tax increases kick in early next year.
Those concerns, against a backdrop of debt troubles in the euro zone, have weighed on financial markets and led to oil swinging in about a $7 range this week, its widest since late September.
Investors are also monitoring how the United States will tackle the issue of the debt ceiling, which needs to be raised to avoid a government shutdown.
"For the time being, the uncertainty over the fiscal cliff in the U.S. will prevent any price recovery," analysts at Commerzbank in Frankfurt said in a note.
Across the Atlantic, euro-zone finance ministers are to meet on Monday in Brussels. The main topic of their discussions will be thawing the freeze on lending to Greece.
Supportive October data from China underpinned oil prices on Friday. Infrastructure investment accelerated and output from the country's factories ran at its fastest in five months.
China's October exports rose more than 11 percent from a year ago, and imports grew by 2.8 percent, Commerce Minister Chen Deming said.
The data offered evidence that a cyclical recovery gained strength last month after the Chinese economy in the third quarter suffered the slowest period of growth since early 2009.
Separate data showed U.S. wholesale inventories rose in September by the most in nine months as wholesalers sharply boosted stocks of farm goods and oil. (Reporting by Alice Baghdjian in London, Ramya Venugopal in Singapore and Robert Gibbons in New York; Editing by Alden Bentley and John Wallace)