BS: Oil Fluctuates on European Optimism, Supply Forecasts
Crude fluctuated on optimism Europe is moving closer to containing the debt crisis and forecasts that U.S. inventories rose last week.
Prices swung between gains and losses as the euro advanced against the dollar amid speculation Spain is preparing to seek a bailout that will trigger European Central Bank purchases of its debt. Oil stockpiles probably increased 1.5 million barrels in the seven days ended Sept. 28 as imports rebounded, according to a Bloomberg survey before an Energy Department report tomorrow.
“The euro is getting a little bit better on expectations that Spain will seek a bailout and the ECB will come in to buy the bonds, and that’s helping oil,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “There is no concern about supplies in the U.S.”
Crude for November delivery gained 10 cents to $92.58 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Prices are down 6.3 percent this year.
Brent for November settlement slid 11 cents to $112.08 a barrel on the London-based ICE Futures Europe exchange.
Spanish Economy Minister Luis de Guindos said yesterday after a meeting with Olli Rehn, the European Union’s economic and monetary affairs commissioner, that the country is studying the ECB bond-buying proposal.
The euro gained as much as 0.4 percent to $1.2944. A stronger euro and weaker dollar boost oil’s appeal as an investment alternative. The ECB will probably keep its benchmark rate at a record low of 0.75 percent when council members meet on Oct. 4, according to a Bloomberg survey.
Euro Rises
“The euro is testing the $1.30 level and that should be helpful to the market,” said Bill Baruch, senior market strategist at Iitrader.com in Chicago. “We are trading ahead of European interest-rate decisions later this week”
Oil inventories in the U.S. probably increased 0.4 percent to 366.7 million barrels last week, the Bloomberg survey of eight analysts showed. Shipments into the U.S. probably rose after the biggest weekly drop since July 1998 in the week ended Sept. 21.
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
