BLBG:Oil Rises As European Leaders Prep For Debt Talks
Oil traded near its highest closing level in three months in New York, the longest streak of gains in a month, before Europe’s leaders meet to discuss combating regional debt turmoil.
Crude pared an advance of 0.5 percent after Germany’s Bundesbank stepped up its criticism of the European Central Bank’s plan to embark on potentially “unlimited” government bond purchases, widening a rift over how to tackle the sovereign debt crisis. European policy makers plan a week of intensive shuttle diplomacy to help resolve the situation. Saudi Arabia pumped at the highest level in more than three decades in June and monthly exports were the most since November 2005, according to the Joint Organization Data Initiative.
“I remain optimistic that a solution to the Euro crisis will be found,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts prices will trade within a $4 range this week before advancing. “There is simply too much at stake to let the Euro project fail. From a longer perspective, upside bias for oil is warranted due to market fundamentals.”
Crude for September delivery was at $95.97, 4 cents lower, in electronic trading on the New York Mercantile Exchange at 11:07 a.m. London time, having increased as much as 52 cents to $96.53 a barrel. It rose 0.4 percent to $96.01 on Aug. 17, the highest close since May 11. The contract expires tomorrow. The more-actively traded October future was at $96.26. Oil’s run of gains is the longest since the seven days ended July 19. Front- month prices are 2.7 percent lower this year.
Brent oil for October settlement climbed 52 cents, or 0.5 percent, to $114.23 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $17.97, from $17.39 on Aug. 17.
Bundesbank Disagreement
“The Bundesbank holds to the opinion that government bond purchases by the Eurosystem are to be seen critically and entail significant stability risks,” the Frankfurt-based central bank said in its monthly report today. The new program “could be unlimited” and decisions about potentially far greater sharing of solvency risks should be taken by governments or parliaments, not by central banks, it said.
Jean-Claude Juncker, the Luxembourg premier who heads the group of euro-area finance ministers, is expected in Athens on Aug. 22 to discuss Greek Prime Minister Antonis Samaras’ request of a two-year extension for the country’s fiscal adjustment program. Samaras travels to Berlin and Paris on Aug. 24 and 25 after French President Francois Hollande and German Chancellor Angela Merkel meet in the German capital on Aug. 23.
Saudi Arabia Production
Saudi Arabia’s output increased 3 percent to 10.1 million barrels a day in June from May, according to data submitted by the government to the Organization of Petroleum Exporting Countries and posted on JODI’s website yesterday. Exports were at 7.84 million barrels. The Middle East nation overtook Russia, which pumped 9.9 million barrels, as the world’s largest oil producer during the month, the data showed.
Net-long positions in oil held by money managers, including hedge funds, commodity pools and commodity trading advisers, retreated by 11,764, or 7.2 percent, to 152,222 futures and options combined in the seven days ended Aug. 14, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Aug. 17.
Combined purchases of new and existing homes in the U.S. increased to a 4.89 million annual rate from a 4.72 million pace in June, according to the median forecast in a Bloomberg survey. The National Association of Realtors will release existing sales on Aug. 22, with the Commerce Department publishing data on new sales the next day.
“Oil has been aided by the pickup in consumer confidence in the U.S.,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. The increase in Saudi production shows “the supply capacity is there to meet increased demand,” he said.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
