BLBG: Oil Retreats From Two-Year High in New York on Sovereign Debt Concern
Crude oil retreated from a two-year high as French and German calls to make investors share the costs of restructuring sovereign debt and the Irish fiscal crisis reduced demand for raw materials.
Oil slipped after the dollar advanced against the euro amid renewed concern that Europe’s so-called peripheral countries will struggle to cut budget deficits. Futures surged earlier today when a report showed that Chinese refineries processed 12 percent more crude in October than a year earlier, according to China Mainland Marketing Research Co.
“We were able to ignore the dollar earlier because of the Chinese numbers,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The dollar has become the focus again.”
Crude oil for December delivery rose 12 cents to $87.93 a barrel at 9:13 a.m. on the New York Mercantile Exchange. Futures touched $88.63, the highest level since Oct. 9, 2008.
Brent crude oil for December settlement increased 4 cents to $89 a barrel on the ICE Futures Europe exchange in London.
Refineries in China processed a record 37 million metric tons, or 8.8 million barrels a day, in October. The previous high was 8.6 million barrels a day in June.
“The market perception is that unbridled Chinese demand will continue to support oil,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “But there are still question marks about whether fundamentals elsewhere can durably keep prices this elevated.”
The Organization of Petroleum Exporting Countries raised its 2011 forecast for global oil demand as industrial consumption recovers in developed countries including the U.S. and Germany.
OPEC expects daily oil use to grow by 1.2 million barrels to 86.95 million barrels next year, according to the producer’s monthly report today. That’s 120,000 barrels a day more than last month’s forecast.
To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
