Crude Oil Advances as Euro Extends Gains After Italian Treasury-Bond Sale

Author: Spencer Ogden
Date posted29/Nov/2011
Author: Spencer Ogden

Crude oil rose a third day in New York, recouping earlier losses as a strengthening euro and advancing equities signaled investors were less concerned thatEurope’s debt crisis will derail the global recovery.

West Texas Intermediate futures gained as much as 1.1 percent, having earlier lost 1 percent. Demand for 2014 bonds auctioned by Italy today was 1.5 times the amount sold. The U.S. Energy Department may say tomorrow oil inventories rose for the first time in a month, while gasoline supplies climbed for a third week, according to a Bloomberg News survey.

“Sentiment has improved on news of the successful Italian bond auction,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “We’re seeing a stronger euro as a result, and crude prices gaining alongside the broader commodity market rebound.”

Oil for January delivery on the New York Mercantile Exchange was up 11 cents at $98.32 a barrel at 12:56 p.m. London time after falling as low as $97.23. Brent crude for January settlement on the ICE Futures Europe Exchange was up 87 cents at $109.87 a barrel, reversing a 61-cent decline.

The Stoxx Europe 600 Index climbed 0.3 percent as of 12:56 a.m. in London. Standard & Poor’s 500 Index futures added 0.5 percent. The euro appreciated 0.2 percent to $1.3340.

OPEC Quotas

U.S. crude inventories probably climbed 1 million barrels last week, according to the median of seven analyst estimates in a Bloomberg News survey. Gasoline supplies may have increased 1.1 million barrels, the survey showed. The Energy Department is scheduled to release its report tomorrow in Washington.

The American Petroleum Institute will release its inventory report today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

The Organization of Petroleum Exporting Countries may keep oil production quotas at current levels when it meets next month, Ecuador’s Non-Renewable Natural Resources Minister Wilson Pastor said yesterday. The group is scheduled to meet in Vienna for an annual conference on Dec. 14.

Venezuela is seeking to maintain current OPEC quotas, Oil Minister Rafael Ramirez said yesterday. Member countries exceeding the limit should lower their output, he said. The group’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Speculative Positions

Money managers including hedge funds reduced bullish bets on oil for the week ended Nov. 22, according to data released yesterday by ICE Futures Europe and the Commodity Futures Trading Commission.

Managers cut bullish bets on Brent crude by 5,356 contracts in the week ended Nov. 22, London-based ICE said yesterday in its weekly Commitment of Traders report. Net-long bets on WTI fell by 26,387, or 12 percent, to 189,688, CFTC data showed. It was the largest drop since the week ended Aug. 2.