WSJ: OIL FUTURES: Crude Futures Recover From Drop, Trade Flat
--Oil prices recover from drop on Slovakia vote, trade above $85 a barrel
--IEA, OPEC projections buoy market
--Brent-WTI spread widens, forcing short-sellers to buy
By Christian Berthelsen
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Oil futures shook off an overnight dip after Slovakia rejected an expansion of the euro-zone bailout fund, and were about even Wednesday morning on less-than-bearish projections from international energy planners and OPEC.
Crude prices dropped as much as $1.29 a barrel Tuesday night after the Slovakia vote. But the vote was tied to a no-confidence vote in the government, and market watchers believe the bailout expansion, known as the European Financial Stability Facility, will be approved by the country as soon as the government is reorganized.
"The EFSF is likely to be fully funded within the week," research firm Cameron Hanover said in a note. Prices re-entered positive territory early Wednesday morning.
Meanwhile, the International Energy Agency trimmed energy demand forecasts due to the worsening global economy, but also said similar reductions in oil production would keep market dynamics in balance. The Organization of Petroleum Exporting Countries also trimmed demand forecasts, but said demand is still rising and that it doesn't expect another global recession.
Oil was following U.S. stocks, which were up in early trading. The dollar was down against the euro. A stronger dollar makes purchasing oil more expensive for holders of other currencies.
Light, sweet crude for November delivery was down 6 cents, or 0.1%, at $85.73 a barrel on the New York Mercantile Exchange at 9:25 a.m. EDT. Brent crude on the ICE Futures Europe exchange was up $1.13, or 1.0%, to $111.86 a barrel. The spread between the two contracts, which had declined recently, has begun to widen again to $26, near its all-time high, as traders were betting on it contracting.
"The spread's widening out, which a lot of people thought was going to narrow," said Tony Rosado, a broker with GA Global Markets. "There may be some short covering."
Front-month November reformulated gasoline blendstock, or RBOB, was up 1.08 cents, or 0.4%, at $2.7584 a gallon. November heating oil was up 1.91 cents, or 0.7%, at $2.9232 a gallon.
