(Reuters) - Oil futures rose towards $114 per barrel on Thursday, buoyed by expectations the European Central Bank will manage to ease its debt crisis with a new program of bond purchases.
Europe's debt crisis and slowing global economic growth have fuelled worries about the demand outlook for commodities.
Investors hope a new ECB bond-buying program will help cut the borrowing costs of Spain and Italy, allowing the euro zone economy to begin to recover from recession.
The EU's statistics office Eurostat confirmed on Thursday that gross domestic product in the 17 countries using the euro fell 0.2 percent quarter-on-quarter.
Brent crude futures rose 88 cents to $113.97 a barrel by 7:29 a.m. EDT (1129 GMT). U.S. crude gained $1.14 to $96.50.
"The importance of Draghi is one of confidence. You have to look back at May when oil collapsed around the Greek elections," said Harry Tchilinguirian at BNP Paribas in London.
"Following his comment about vowing to save the euro, he's not in a position to disappoint."
Even with a new ECB plan to address the debt crisis, weakness could pervade in the medium to longer term.
U.S. non-farm payrolls figures are scheduled for release on Friday. A soft report could strengthen the case for a third round of monetary easing, also known as quantitative easing (QE3), by the Federal Reserve.
The euro held firm near a two-month peak after rallying sharply in the previous session ahead of the ECB meeting.
AFTER ISAAC
Lending further support to oil prices, U.S. crude stocks fell sharply last week as Hurricane Isaac's passage through the Gulf of Mexico shut in production and closed ports, data from the industry's American Petroleum Institute showed.
Crude inventories fell by 7.2 million barrels in the week to August 31, a much steeper drop than analysts' expectations for a drawdown of 5.3 million barrels.
"A drop was expected. The fall will amount to 12.5 million barrels in total lost to Isaac. We will see that in the statistics next week," said Olivier Jakob at consultancy Petromatrix in Zug, Switzerland.
"Production is a little bit slow to come back and there is the leftover of Isaac on its way back. It's not strong but could delay restarts."
The Energy Information Administration's (EIA) report on oil inventories is due at 1500 GMT on Thursday, delayed by a day after Monday's U.S. Labor Day holiday.
Tensions in the Middle East continued to uphold the risk premium embedded in oil prices.
The U.N. nuclear watchdog showed a series of satellite images on Wednesday that fuelled suspicion of clean-up activity at an Iranian military site it wants to inspect, Western diplomats said, but Tehran's envoy dismissed the presentation.
Prices were capped however, by continued talk of a strategic stocks release in the United States, which has kept Brent largely within a $110-$115 a barrel range over the last month.
"There is no trend in the flat price in the last four weeks because of continued support from Iran and SPR (Strategic Petroleum Reserve) noise capping prices," Jakob said.
Iran is under growing pressure over its disputed nuclear program and companies are cutting ties with its vital shipping sector, which transports most of its crude oil, for fear of losing lucrative U.S. business.
Supply of the North Sea crude oil that underpins the benchmark Brent contract is set to rise from a record low in October, weakening a source of support for prices, export schedules showed on Thursday.
