Oil rose from the lowest in almost a week in New York after the European Central Bank cut interest rates for a second month and as the region’s leaders meet to tackle the sovereign debt crisis.
Futures gained as much as 0.9 percent as ECB policy makers in Frankfurt lowered the benchmark interest rate by a quarter percentage point to 1 percent to match a record low. The region’s leaders meet in Brussels today to lay the foundations for a fiscal union, seeking to stave off an economic slowdown that would curb demand for raw materials.
“This is optimistic news ahead of the European Union summit tomorrow,” said Myrto Sokou, an analyst at Sucden Financial Ltd. in London. “A cut from 1.25 to 1 percent was widely expected.”
Crude for January delivery climbed as much as 94 cents to $101.43 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.27 at 1:35 p.m. London time. Yesterday, the contract fell 0.8 percent to $100.49, the lowest settlement since Dec. 1. Futures are up 10 percent this year after advancing 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange gained 0.8 percent to $110.45 a barrel. The European benchmark contract was at premium of $8.90 to New York-traded West Texas Intermediate grade. The spread was a record $27.88 on Oct. 14.
Saudi Arabia, the world’s biggest crude exporter, will produce “whatever the customers want,” after pumping 10 million barrels of oil a day last month, Oil Minister Ali al-Naimi said in an interview in Durban, South Africa today. It will meet with other members of the Organization of Petroleum Exporting Countries next week in Vienna to discuss output targets.
The kingdom seeks to have a spare oil production capacity of 1.5 million to 2 million barrels a day, al-Naimi said. Saudi Prince Turki bin Faisal bin Abdulaziz al-Saud, former envoy to the U.S. and a member of the Saudi royal family, estimated the nation’s surplus output at 2.5 million barrels a day in October.