BLBG: Oil Rebounds From Four-Week Low as Irish Bailout Nears, U.S. Supplies Drop
Oil rebounded from a four-week low as the growing prospect that Ireland will get a rescue bailout from the European Union stoked gains for stocks and commodities around the world.
Crude rose as much as 2.1 percent, snapping four days of declines, after Ireland’s central bank governor said he expects the country to seek a bailout from the European Union and the International Monetary Fund. Yesterday’s Energy Department report showed crude inventories unexpectedly dropped the most since August 2009.
“The situation in Europe looks like it’s going towards a solution,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “There will be a rescue for Ireland, and that’s good news for the euro. Fundamentals are on the side of investors; inventories are going down.”
Crude for December delivery advanced as much as $1.70 to $82.14 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.01 at 9:09 a.m. London time. Brent crude for January settlement rose as much as $1.72, or 2.1 percent, to $85 a barrel on the London-based ICE Futures Europe exchange.
The New York contract, which expires tomorrow, fell yesterday to $80.44, the lowest settlement since Oct. 19. The more actively traded January future was up $1.58 at $82.62.
Crude slumped yesterday amid speculation that China, the world’s biggest energy-consuming country, will raise interest rates to cool economic growth. Prices also dropped on concern Europe’s debt crisis is worsening. Oil has fallen 4 percent since last week and is up 2.7 percent this year.
Irish Bailout
Irish Central Bank Governor Patrick Honohan said today he expects the country to ask for a bailout from the EU and the IMF worth “tens of billions” of euros to rescue its banks. A final decision hasn’t been reached, he said in an interview with Irish state broadcaster RTE.
Gasoline inventories slipped 2.66 million barrels to 207.7 million, the lowest level since the week ended Oct. 16, 2009, the Energy Department report showed. They were projected to slide 750,000 barrels, according to the Bloomberg News survey. Imports were the lowest since January 2004.
Stockpiles of distillate fuel, a category that includes heating oil and diesel, fell 1.11 million barrels to 158.8 million. They were forecast to decline 2 million barrels.
The Energy Department report showed crude imports tumbled 2.8 percent to 7.86 million barrels a day, the lowest level since December.
“It’s good to see stockpiles sliding because that’s giving a sense of relief that something’s happening” with oil fundamentals, said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “It seems to be the start of a trend. It could be that consumption is improving.”
To contact the reporters on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
