Oil advanced as optimism that central bank stimulus will revive the global economy pared crude’s biggest weekly decline in more than three months.
Futures rose as much as 1.5 percent and stocks gained after the Financial Times said that Spanish and European Union officials were working on plans to trigger bond purchases by the European Central Bank. Crude climbed to $100.42 a barrel Sept. 14 after the Federal Reserve announced it would make purchases of debt in a third round of so-called quantitative easing.
“The pressures that pushed us to $100 are still in the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There’s been a great deal of stimulus added to the market.”
Crude oil for November delivery advanced 99 cents, or 1.1 percent, to $93.41 a barrel at 9:09 a.m. on the New York Mercantile Exchange. The October contract expired at $91.87 yesterday. The front-month price is down 5.6 percent this week, the biggest drop since June 1.
Brent oil for November settlement climbed $1.01, or 0.9 percent, to $111.04 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate traded in New York was at $17.63.
Spanish Economy Minister Luis de Guindos is in talks with European Commission authorities to facilitate a new bailout program that will be presented Sept. 27, the Financial Times reported, citing unidentified officials involved in the discussions. The plan will focus on structural measures sought by the EU and not on new taxes or spending cuts, the FT said.
Technical Support
“Oil is caught between the pull of excess supply over the next few months, and the push of quantitative easing and hopes for an improvement in growth from the various stimulative programs,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd. “We think it is likely to remain volatile for a while longer.”
New York crude has technical support after settling below the lower Bollinger Band at $92.55 a barrel the past two days. The last time it closed below the band on June 21, oil gained 12 percent over the next eight trading sessions.
The oil market is sufficiently supplied, and additional crude is coming from Saudi Arabia, Canada and the U.S., the International Energy Agency’s executive director, Maria van der Hoeven, said yesterday in Madrid.
A fire at a fuel-storage tank at Petroleos de Venezuela SA’s El Palito refinery should be put out today, according to the country’s President Hugo Chavez. A second tank blaze was extinguished yesterday.
The fires were triggered by lightning that struck a seal on the tanks at 7:30 p.m. on Sept. 19 during a rainstorm, Oil Minister Rafael Ramirez said in a telephone call aired on state TV. Trucks used foam to extinguish the second fire, he said.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets in New York at dstets@bloomberg.net.
