BLBG:Oil Rises a Second Day Amid Israel Conflict, U.S. Budget Talks
Oil advanced for a second day in New York after Israel said it may expand an assault on the Gaza Strip and U.S. House Speaker John Boehner indicated budget talks with President Barack Obama were constructive.
Futures climbed as much as 0.9 percent after Israeli Prime Minister Benjamin Netanyahu said yesterday that the army is prepared to “significantly widen the operation,” raising concern Middle East unrest will disrupt oil supplies. Obama and congressional leaders met Nov. 16 to discuss how to avert the fiscal cliff, a combination of spending cuts and tax increases that threaten to throw the world’s biggest crude user into a recession next year.
“The market is concerned about an escalation to the conflict in Israel,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “Nervousness about the Middle East is forcing the hand of a few short positions,” or wagers on falling prices, he said.
Crude for January delivery rose as much as 76 cents to $87.68 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.57 at 12:18 p.m. Singapore time. The contract increased $1.05 to $86.92 on Nov. 16 to cap a second weekly gain. Front-month prices are down 11 percent this year.
Brent for January settlement gained 66 cents, or 0.6 percent, to $109.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.05 to West Texas Intermediate.
Israel Attack
Israeli ground forces are poised to invade the Gaza Strip for the first time in almost four years amid efforts by Egypt and Turkey to help end the rocket battles that have killed 71 Palestinians and three Israelis.
“We will continue to act, to attack and perhaps even to intensify the operation,” Defense Minister Ehud Barak said during an appearance near Tel Aviv yesterday, according to an e- mailed statement. “If there is a need, we won’t hesitate to undertake ground maneuvers.”
The assault threatens a region that remains unsettled after a wave of uprisings last year, including one in neighboring Syria that has become a civil war. Israel says its goal is to make Palestinians in Gaza stop firing rockets, which have killed three Israeli civilians.
Money managers cut bullish bets on crude oil by 18 percent to 100,021 contracts in the week ended Nov. 13, the biggest reduction since May, according to data from the Commodity Futures Trading Commission.
Rising Saudi Exports
Saudi Arabia’s oil exports rose in September to 7.28 million barrels a day as local refineries cut processing by almost 15 percent, according to data posted on the Joint Organizations Data Initiative website yesterday. The nation pumped 9.72 million barrels a day the same month.
U.S. President Barack Obama, speaking at a news conference yesterday in Bangkok, expressed confidence that he and Congress would reach an agreement to avoid the automatic spending cuts and tax increases. Republicans are also signaling willingness to compromise, with Boehner repeating his offer to discuss tax changes that would increase government revenue in exchange for spending cuts.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
