London - Brent crude oil rose to 116 dollars on Wednesday, lifted by a German court decision backing a euro zone bailout fund and hopes the Federal Reserve will ease monetary policy this week.
Brent crude for October delivery, which expires on Thursday, rose for a fifth straight session, gaining 1.08 dollars to reach 116.48 dollars a barrel.
It earlier hit 116.67 dollars, its highest point since Aug 16. U.S. crude for October delivery rose 44 cents to 97.61dollars a barrel.
Germany's Constitutional Court said on Wednesday the country could ratify the euro zone's new rescue fund and budget pact.
This it would do as long it could guarantee there would be no increase in German financial exposure to the bailout fund without parliament's approval.
"I think it should be seen as a positive step in the long road to solving the euro zone debt crisis.
``I think markets will be relatively pleased with the announcement, and the conditions put in place," said Henk Potts, market analyst at Barclays Wealth.
A two-day U.S. Federal Reserve policy meeting starts on Wednesday.
Markets widely expect some type of new monetary stimulus to boost the U.S. economy, helping to brighten a gloomy demand outlook.
Global oil demand is poised to be depressed for the next 18 months while supply levels from OPEC countries are at fairly comfortable levels, the West's energy agency the IEA said.
The IEA said it made no significant changes to its global oil demand outlook.
It forecast demand would grow at a steady rate of around 0.8 million barrels per day (bpd) or 0.9 per cent in both 2012 and 2013.
Some analysts said the oil demand outlook would probably be marked down by the IEA in the future.
"With prices this high, it's going to be an issue for developed and emerging markets where governments will need to adjust domestic prices.
``This is not factored into the report yet. They tend to revise demand lower much later," said Olivier Jakob, at Petromatrix in Zug, Switzerland.
The U.S. government and OPEC offered differing outlooks for global oil markets on Tuesday, with Washington ratcheting up price forecasts for oil on stronger demand.