BLBG:Oil Near One-Week High On Stimulus Speculation, Mideast Unrest
Oil traded near the highest level in a week in New York on speculation U.S. and European policy makers will act to boost growth and concern that unrest in the Middle East may spread and disrupt supplies.
Futures were little changed, heading for the first monthly gain in three. European Central Bank President Mario Draghi is trying to build a consensus among governments and central bankers for a plan to ease borrowing costs in Spain and Italy before ECB policy makers convene on Aug. 2. The Syrian government’s use of “indiscriminate violence” will hasten its collapse, U.S. Defense Secretary Leon Panetta said. The Middle East produces about a third of the world’s crude.
“Draghi’s comments are confirming the positive trend change driven by sentiment,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “I wouldn’t be surprised to see oil prices higher on improving sentiment, and more confidence.”
Crude for September delivery was at $90.14 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange at 9:20 a.m. London time. It advanced earlier as much as 82 cents, or 0.9 percent, to $90.95 a barrel. The contract climbed 0.8 percent to $90.13 on July 27 for a fourth day of gains and the highest close since July 20. Prices are up 5.6 percent this month.
Brent oil for September settlement was at $105.90 a barrel, down 57 cents, on the London-based ICE Futures Europe exchange. The European benchmark crude was at a $15.82 premium to New York-traded West Texas Intermediate grade. The spread was $16.34 on July 27, the widest since May 22.
‘Hanging Man’
Oil’s advance in New York may stall, as a bearish “hanging man” candlestick last week signals a loss of technical momentum, according to data compiled by Bloomberg. Futures began a descent to the lowest level in almost nine months after a similar chart formation in the last week of April.
The ECB’s Governing Council is scheduled to meet Aug. 2 in Frankfurt and gauge the effect of its July decision to cut the benchmark interest rate to a record low of 0.75 percent. The Fed’s Federal Open Market Committee will consider the need for more stimulus at a two-day meeting that concludes Aug. 1.
The ECB’s Draghi meets with U.S. Treasury Secretary Timothy Geithner in Frankfurt today. Draghi is also trying to persuade policy makers to agree on a multipronged approach to reduce bond yields in countries such as Spain and Italy, two central bank officials said July 27, asking not to be identified because the talks are private.
Syrian Fighting
In Syria, government forces stepped up their assault on rebels in Aleppo, the nation’s commercial hub, and Damascus, killing at least 120 people, according to the Local Coordination Committees, an activist group. Panetta spoke to reporters yesterday as he started a five-day trip to Tunisia, Egypt, Israel and Jordan to discuss security in the Middle East.
Enbridge Energy Partners LP (EEP) said it’s unsure how soon it can resume operations at a pipeline that supplies crude to Chicago-area refineries after a leak.
The Enbridge leak of about 1,200 barrels of oil on July 27 was on Line 14 near Grand Marsh, Wisconsin, about 60 miles (96 kilometers) north of the state capital of Madison. The pipeline has a capacity of 317,600 barrels a day and mostly supplies light crude, the company said in a statement.
Hedge funds increased their bets on rising crude prices last week, according to data from the U.S. Commodity Futures Trading Commission. Net-long positions in oil futures held by money managers advanced by 7,471, or 5.6 percent, to 140,636 futures and options combined in the seven days ended July 24.
The average price of regular gasoline at U.S. filling stations rose 9.55 cents in the past two weeks to $3.5058 a gallon, according to Lundberg Survey Inc.
The survey covers the two weeks ended July 27 and is based on information received from about 2,500 stations by the Camarillo, California-based company. The average is down 19.55 cents from a year earlier. Gasoline is 46.13 cents below the year-to-date high of $3.9671 on April 6.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
