BLBG:Oil Rises From One-Week Low as Euro Ministers Agree on Greek Aid
Oil rose from the lowest level in almost a week after European finance ministers reached an agreement on aid for Greece, easing concern that the region’s debt crisis will derail recovery and curb fuel demand.
Futures advanced as much as 0.6 percent in New York after ending 0.6 percent lower yesterday. Ministers agreed to help Greece manage its debt burden in talks in Brussels that lasted 13 hours, a European Union official said early today. It was the fourth round of discussions by ministers on the Greek crisis in two weeks. U.S. crude inventories probably rose 500,000 barrels last week, according to a Bloomberg News survey of analysts before an Energy Department report tomorrow.
“The positive outcome on Greece has already been priced in,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who predicts Brent crude may slide to $110 a barrel this month. “Now attention is turning to fundamentals and they are far from ideal.”
Crude for January delivery gained as much as 51 cents to $88.25 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.05 at 9:02 a.m. London time. The contract decreased 54 cents yesterday to $87.74, the lowest since Nov. 21. Prices are down 11 percent this year.
Brent for January settlement advanced 7 cents to $111.01 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.07 to West Texas Intermediate, compared with $23.18 yesterday.
Greece Deal
International Monetary Fund Managing Director Christine Lagarde said after the Brussels meeting that her aim to get Greece’s debt on a “sustainable path” was achieved in the discussions. IMF criticism of Europe’s failure to do so had held up an accord.
The European currency rose as much as 0.3 percent to $1.3009, the highest since Oct. 31. A stronger euro and weaker U.S. dollar increase the appeal of dollar-denominated raw materials as an investment.
“Another life line for Greece is supportive for oil, as it shows we are slowly working our way through the euro crisis,” said Jeremy Friesen, a commodity strategist at Societe Generale SA in Hong Kong. “Improvements in the euro crisis should be positive for the euro and thus could also add some weaker-dollar support to oil prices.”
The EU accounted for 16 percent of the world’s oil consumption last year, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. and China were the world’s biggest crude users, accounting for a combined 32 percent.
Keystone Pipeline
U.S. gasoline supplies probably rose 1 million barrels, according to the median of five analyst estimates in the Bloomberg survey before the Energy Department report. Distillates, a category that includes heating oil and diesel, rose 500,000 barrels, the survey shows. The American Petroleum Institute will release separate inventory data today.
WTI futures will average $95 a barrel next year, $20 less than Brent, as U.S. President Barack Obama approves the Keystone XL pipeline that will import crude supplies from Canada, Mirae Asset Securities said today.
Brent will average $115, up from $111 this year, as global demand rises 0.9 percent annually to more than 90.5 million barrels a day, Gordon Kwan, the broker’s head of energy research in Hong Kong, said in an e-mailed report. China and the Middle East will account for almost two-thirds of the growth in demand, he forecast.
To contact the reporters on this story: Ben Sharples in Melbourne at Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
