By early afternoon in Europe, benchmark West Texas Intermediate crude for April delivery was up nine cents to US$93.83 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to end at US$93.74 a barrel in New York on Monday.
Traders are worried about a plan to seize up to 10 per cent of money in savings accounts in Cyprus to help pay for a €15.8-billion (US$20.4-billion) financial bailout. The country's eurozone partners and the International Monetary Fund would contribute €10 billion of the total.
The government shut down banks until later this week while lawmakers wrangled over how to keep the island country from bankruptcy. A vote is expected Tuesday.
Some bank customers withdrew as much of their cash as they could and the fear was that the panic might spread to other countries and prompt capital flight from weaker EU economies.
The situation in Cyprus "has the potential to rekindle the financial crisis in the peripheral countries, which had been rather calm lately," said a report from JBC Energy in Vienna.
Others said market reaction was relatively subdued, especially compared with similar events in previous years.
Analysts at Frankfurt's Commerzbank, while noting that "the upside potential is likely to remain limited" until the uncertainty over Cyprus subsides, also pointed out that the lack of alternative investment opportunities could support crude prices.
"The continuing high liquidity among investors, coupled with their willingness to take risks, is likely to lend support also to the commodities markets in the coming months," Commerzbank said.
U.S. housing data released Tuesday provided more signs that the U.S. economy seems to be picking up speed, which provided support for oil prices.
The Commerce Department said builders broke ground on homes last month at a seasonally adjusted annual rate of 917,000, up from 910,000 in January and the second-fastest pace in 4 1/2 years.
Building permits also increased in February, rising by 4.6 per cent to 946,000. That was the most since June 2008.
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ended March 15 is expected to show a build of two million barrels in crude oil stocks and a draw of 2.5 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the U.S. Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
Brent crude, used to price many kinds of oil imported by U.S. refineries, was down 35 cents to US$109.16 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex, wholesale gasoline lost 0.68 cent to U.S.$3.1108 a U.S. gallon (3.79 litres), heating oil fell 1.04 cents to US$3.021 a gallon and natural gas rose 0.5 of a cent to US$3.887 per 1,000 cubic feet.
(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)