BLBG:Oil Recovers on Speculation Impact of S&P Ratings Reviews May Be Limited
Oil advanced for a third day in New York, reversing earlier losses as a surge in German manufacturing tempered concerns that Standard & Poor’s may downgrade the credit ratings of European nations.
West Texas Intermediate gained as much as 0.2 percent, recouping a loss 0.6 percent. German factory orders rose the most in 19 months in October after three straight declines. Standard & Poor’s said yesterday it may strip Germany and France of AAA credit ratings as it weighs downgrades for 15 nations. U.S. gasoline and distillate stockpiles rose last week while crude supplies shrank, according to a Bloomberg News survey.
“S&P’s announcement relates more to the outlook for a rating downgrade than a real downgrade” said Hannes Loacker, an analyst at Raiffeisen AG in Vienna, who predicts WTI will average $82 a barrel in the first quarter. “The market is getting a bit more optimistic about recent rescue measures and the willingness for solving the European debt crisis.”
Crude for January delivery advanced as much as 21 cents to $101.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.16 at 10:50 a.m. London time. Yesterday, the contract gained 3 cents to $100.99, the highest settlement since Nov. 16. Futures are up 10 percent this year after rising 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange rose 47 cents, or 0.4 percent, to $110.28 a barrel. The European benchmark contract was at an $9.06 premium to New York-traded West Texas grade, compared with $8.82 yesterday and a record $27.88 on Oct. 14. Brent last closed at a discount to WTI in August 2010.
Factory orders in Germany, adjusted for seasonal swings and inflation, jumped 5.2 percent from September, when they dropped 4.6 percent, the Economy Ministry in Berlin said in a statement today. Economists in a Bloomberg News survey had forecast a 1 percent increase for October.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
