Crude oil rose on Wednesday, rebounding from a sharp decline as hopes that Greece's debt restructuring will go through lifted the euro against the dollar, creating better bargains for oil buyers and fanning interest in riskier trades.
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Also helping oil recover from the previous day's sharp drop was data showing an accelerated pace of job creation in the U.S. private sector in February, raising optimism about Friday's government employment report for that month.
News that China plans to increase energy imports this year, seen leading to a better second half, helped pull up oil prices in early trading.
"The dollar's reversal on the news that more private bond holders are participating in the Greek debt swap has given way to the return of risk-on oil trades," said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Connecticut.
In London, ICE Brent crude for April delivery settled at $124.12 a barrel, up $2.14, or 1.75 percent, rebounding strongly after declining $1.82 on Tuesday. In post-settlement dealings, the Brent contract' session high further increased, to $124.45.
U.S. April crude settled at $106.16, gaining $1.46 or 1.39 percent. In post-settlement trading, the contract's session high rose further, to $106.55. It fell more than $2 on Tuesday.
Brent's premium against U.S. crude widened to $17.96 at the close, near the session high of $18.05, from $17.28 on Tuesday. <CL-LCO1=R> as the U.S. government data showed crude stockpiles at the Cushing, Oklahoma, delivery hub rose sharply last week.
Brent's total trading volume rose 14 percent above its 30-day average and U.S. crude volume was 10 percent above its 30-day average, Reuters data showed.
On Tuesday, oil futures retreated on global growth economic worries and as the geopolitical risk premium fell on news that major powers had accepted Iran's offer for more talks about its nuclear program.
U.S. JOBS, OIL INVENTORY DATA
Hiring by U.S. companies rose by 216,000 in February, according to the private sector ADP National Employment Report, which was higher than expected. The data raised expectations that the labor market recovery was moving at a faster clip.
On Friday, the U.S. government issues more comprehensive private and public sector employment data for February. Economists polled by Reuters expect a gain of 210,000 in nonfarm payrolls, with a gain in the private sector of 225,000 jobs offseting a modest dip in government jobs.
Meanwhile, U.S. government inventory data showed domestic crude stocks rose 832,0000 barrels last week, in line with forecasts, but stocks at the Cushing, Oklahoma, delivery hub surged to the highest level in eight months.
Distillate stocks, which include heating oil and diesel fuel as well as gasoline stocks, both fell, the data showed. That helped pull up heating oil and gasoline futures and added support to crude, analysts said.
The day's widening of the WTI/Brent premium "spurred fresh buying into the (U.S. gasoline) RBOB futures," despite a smaller-than-expected gasoline stock draw, said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
GREECE DEBT, IRAN TALKS
A group of 30 banks and pension funds said they would take part in Greece's bond swap offer to private creditors, adding more supporters and increasing the chances that the deal would be sewn up. That would then clear the way for a bailout and prevent a messy default. Greece's offer expires at 2000 GMT on Thursday.
Euro zone finance ministers are due to decide whether to release the $130 billion euros package during a conference call on Friday, though they have already approved the bailout, subject to the private sector creditor agreement.
Israel cautiously welcomed a plan to resume big-power nuclear talks with Iran, insisting that Tehran be denied the means to turn uranium into bomb fuel.
U.S. President Barack Obama said the planned talks offered a chance to ease tensions over Tehran's nuclear program and quiet the "drums of war".