Oil rose as President Barack Obama’s warning that the U.S. debt stalemate threatens to damage the economy weakened the dollar, boosting the appeal of commodities and countering concern the crisis will hurt demand. Futures swung between gains and losses as Obama called on lawmakers to put politics aside to reach a deal on a “balanced approach” after Republicans and Democrats attacked each others’ plans for the lifting of the nation’s $14.3 trillion debt ceiling. The U.S. currency fell against all of its 16 major peers. An Energy Department report tomorrow may show U.S. crude stockpiles dropped for an eighth week. “Commodities, and oil, are not fundamentally or technically weak,” said Ryoma Furumi, a broker at Newedge Group in Tokyo. Obama “only deferred, prolonged, delegated the matter to party leaders,” he said. Crude for September delivery climbed as much as 40 cents, or 0.4 percent, to $98.80 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.52 at 12:46 p.m. Singapore time. The contract yesterday dropped 67 cents, or 0.7 percent, to $99.20, the lowest since July 21. Prices are 26 percent higher the past year. Brent oil for September settlement was at $117.95 a barrel, up 1 cent, on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $18.45 a barrel to U.S. futures, compared with a record close of $22.63 on July 14. Dollar Falls Prices pared earlier losses as the dollar tumbled, trading at a record low versus the Swiss franc, after Obama warned of dire economic consequences unless the nation’s debt ceiling is increased by an Aug. 2 deadline. The greenback weakened to $1.4472 against the euro from $1.4377. “This issue is bearish but I think we’re seeing a measured reaction in the equity and the oil markets,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “Because people believe that in the end it may come down to the wire but it will get done. But everyone agrees that if it does go bad it could really go bad so that is keeping downward pressure on the market.” Obama blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases. U.S. Inventories The Energy Department report will probably show U.S. crude inventories declined 1.75 million barrels from 351.7 million last week, according to the median of eight analyst estimates in the Bloomberg News survey. Gasoline supplies may have climbed 125,000 barrels, the survey shows. The September oil contract in New York closed higher than its 50-day moving average on July 20 and has stayed above that level, “which would suggest a consolidation for a further move higher,” MF Global Ltd. analyst, Tom Pawlicki, said in a report today. Prices are rebounding as the moving average convergence- divergence, an indicator of technical strength, turns positive, according to data compiled by Bloomberg. Front-month futures have resistance along the upper Bollinger Band, around $101 today. To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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