Oil climbed from the lowest in more than a month as the US House of Representatives passed legislation to raise the government's debt ceiling and avoid a default in the world's biggest crude-consuming nation.
Futures rose for the first time in three days. The House approved an increase in the limit by at least $US2.1 trillion and a cut in federal spending by $US2.4 trillion or more. The measure goes to the Senate for a final vote today. Crude oil inventories in Cushing, Oklahoma, dropped 1.9 per cent on July 29 from July 26, according to data compiled by DigitalGlobe Inc.
"Uncertainty around the US debt ceiling has cast a shadow over the global demand outlook and the US demand outlook so you'd expect a resolution to give some support to crude prices," said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts crude will average $US98 a barrel in the third quarter.
Crude for September delivery gained as much as 56 cents, or 0.6 per cent, to $US95.45 a barrel in electronic trading on the New York Mercantile Exchange, and was at $US95.20 at 12:56 p.m. Sydney time. The contract yesterday fell 81 cents to $US94.89, the lowest since June 29. Prices are 17 per cent higher the past year.
Brent oil for September settlement advanced 3 cents to $US116.84 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $US21.64 a barrel to New York futures, compared with a record close of $US22.63 on July 14.
Crude Stockpiles
Crude stockpiles in floating-roof tanks at Cushing fell 720,000 barrels to 36.2 million barrels, satellite images taken by Longmont, Colorado-based DigitalGlobe show. The Energy Department said July 27 that supplies at the hub, including floating and fixed tanks, were 37.1 million as of July 22.
Cushing is the physical delivery point for New York Mercantile Exchange oil futures contracts and the largest crude- trading and storage hub in the US The hub has working storage capacity of 48 million barrels, the department said on May 31.
An Energy Department report tomorrow may show total US crude inventories climbed 1.5 million barrels in the seven days ended July 29, according to the median of nine analyst estimates in a Bloomberg News survey. Gasoline supplies probably rose 500,000 barrels, the survey shows.
Tropical Storm Emily formed in the Caribbean Sea about 50 miles (80 kilometers) southwest of the island of Dominica and is expected to take a turn over the next couple of days that could bring it to Florida, according to an advisory issued by the National Hurricane Center before 8 p.m. New York time.
Oil in New York slipped yesterday after a gauge of US manufacturing showed growth at the slowest pace in two years. The Tempe, Arizona-based Institute for Supply Management said its factory index decreased to 50.9 in July from 55.3 in June.
