BLBG:Crude Oil Advances Most in Two Weeks as Europe Works to Ease Debt Crisis
Oil climbed the most in two weeks in New York as European governments worked to halt the region’s credit crisis.
Futures increased as Italian and Spanish bonds rose amid speculation the European Central Bank bought the debt of the euro-region’s most-indebted nations to stabilize markets and ease concern that the credit crisis is worsening. Crude also gained after failing to sustain a move below the 200-day moving average and on forecasts that U.S. supplies fell last week.
“The European Union is looking for some type of solution, and that’s tided us over for now,” said Carl Larry, director of energy derivatives and research with Blue Ocean LLC in New York. “Nobody wants to see the European Union fail, so everyone’s looking for some signs of competence.”
Crude for August delivery rose $2.28, or 2.4 percent, to settle at $97.43 a barrel on the New York Mercantile Exchange in the biggest one-day gain since June 28. Prices have risen 30 percent in the past year.
Prices pared gains from the settlement and after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 2.34 million barrels to 359.4 million. August oil rose $1.68, or 1.8 percent, to $96.83 a barrel in electronic trading at 4:31 p.m.
Brent oil for August settlement increased 51 cents, or 0.4 percent, to $117.75 a barrel on the ICE Futures Europe exchange in London. The spread between the benchmark New York and London contracts narrowed to $20.32 a barrel from $22.09 at the settlement yesterday.
EU Meetings
The 27 European Union finance ministers met further today after euro-region officials said late yesterday that they may revive bond buybacks to ease Greece’s debt woes and work to end the 21-month-old European debt crisis. An ECB press officer declined to comment on whether it bought so-called peripheral euro-region bonds today.
The euro slipped 0.4 percent to $1.3978 at 4:32 p.m. in New York. It rebounded from a four-month intraday low of $1.3837. A stronger euro and weaker dollar boost the appeal of commodities as an alternative investment to the U.S. currency.
The Standard & Poor’s 500 Index fell 0.4 percent to 1,313.64. The Dow Jones Industrial Average dropped 58.88 points, or 0.5 percent, to 12,446.88.
Oil rose after briefly slipping below its 200-day moving average of $93.77. As it rebounded, it breached resistance at $95.56, the 23.6 percent retracement level on a Fibonacci study from May, and the 30-day moving average at $96.56.
’Poised for $100’
“We’re basically poised for $100 here,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, citing the moves through the resistance levels. “It’ll be off to the races to $100.”
Investors use moving averages and Fibonacci charts to determine levels of support and resistance and predict price direction when those thresholds are crossed.
U.S. crude oil inventories probably dropped 1.5 million barrels, or 0.4 percent, to 357.1 million barrels in the seven days ended July 8, according to the median of 15 analysts in a Bloomberg News survey before an Energy Department report tomorrow. That would be the sixth week of declines.
The Energy Department reduced its crude oil price forecast for 2011 to an average $98.43 a barrel from $101.91 in its monthly Short-Term Energy Outlook, released today.
The department also cut its forecast for global oil consumption for this year to 88.16 million barrels a day from 88.43 million estimated last month.
Demand Outlook
The Organization of Petroleum Exporting Countries projected earlier today that world oil demand will average 88.2 million barrels a day this year, up 1.4 million barrels, or 1.6 percent, from last year. It also said consumption would grow at a slower pace for a second year in 2012 as usage declines in Europe and other industrialized nations.
Global oil consumption will average 89.5 million barrels a day in 2012, OPEC’s Vienna-based secretariat said today in its monthly report, giving its first forecast for next year. That’s up 1.3 million barrels, or 1.5 percent, from the 2011 estimate.
The trade deficit in the U.S. widened in May to the highest level in almost three years, reflecting a surge in the cost of imported crude oil. The U.S. is the world’s largest oil consuming country.
The gap grew 15 percent to $50.2 billion, exceeding all forecasts of 73 economists surveyed by Bloomberg News and the biggest deficit since October 2008, Commerce Department figures showed today in Washington.
U.S. oil imports fell 11 percent to 8.72 million barrels a day in April from the year earlier, according to the latest monthly Energy Department import figures.
Oil volume in electronic trading on the Nymex was 636,121 contracts as of 4:34 p.m. in New York. Volume totaled 594,115 contracts yesterday, 13 percent below the average of the past three months. Open interest was 1.54 million contracts.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
