Corrects enrichment increase in sixth paragraph of story published on May 28.)
Oil advanced for a third day in New York on signs that voters in Greece may back austerity measures needed for a European Union bailout, boosting confidence that the bloc’s debt crisis can be contained.
Futures gained after Greece’s New Democracy party, which supports the bailout plan agreed to with international lenders, was placed first in six opinion polls. Crude has slipped 13 percent this month amid concern that Europe’s turmoil will curb fuel demand. Prices climbed on May 25 after the United Nationssaid Iran boosted its output of enriched uranium. The nation faces an oil embargo starting July because of its nuclear program.
“The economic front is looking slightly better and the geopolitical situation a bit worse,” said Christopher Bellew, senior broker at Jefferies Bache Ltd. in London. “There is a stronger chance of a conservative pro-euro administration in Greece, the situation in Syria appears to have deteriorated and the Iranian talks did not offer any hope of a relaxation in sanctions.”
Crude for July delivery rose 28 cents, or 0.3 percent, to $91.14 a barrel in electronic trading at 1:14 p.m. on the New York Mercantile Exchange. The price is down 7.8 percent this year. There is no floor trading in New York today because of the Memorial Day holiday.
Brent oil for July settled at $107.11 a barrel, up 28 cents, on the London-based ICE Futures Europe exchange. Prices are down 10 percent this month. The European benchmark contract’s premium to West Texas Intermediate was $15.97 a barrel, equaling the spread on May 25.
Iran, the second-biggest crude producer in the Organization of Petroleum Exporting Countries, faces Western sanctions including an oil embargo starting July 1 aimed at persuading it to stop enriching uranium. The Persian Gulf nation has increased its stockpile of 20 percent medium-enriched uranium by a third since February, the UN’s International Atomic Energy Agency said in a May 25 report.
The inspectors also found “the presence of particles” of 27 percent-enriched uranium at the nation’s Fordo facility, they said. Iran, which says its atomic work is peaceful, has been under IAEA scrutiny since 2003 over evidence that it is trying to develop nuclear weapons.
Negotiators from the U.S., the U.K., France, Germany, Chinaand Russia plan to meet their Iranian counterparts June 18 and June 19 in Moscow. The sides were unable to reach agreement during talks in Baghdad last week.
Hedge Fund Bets
“Evidence that Iran’s production of uranium has increased is a reminder that the core issue is still there,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said in a telephone interview today. “If we were to start moving toward the Greek election with a realistic chance that the most likely outcome is a pro-bailout government, that would change the risk profile of a lot of markets.”
The cost of Greece leaving the euro area would be greater than staying in the shared currency, the leader of New Democracy, Antonis Samaras, said May 26. The party led by a margin of as much as 5.7 percentage points over Syriza, which is opposed to implementing the terms of financial aid packages, a poll by Kapa Research SA for To Vima newspaper shows.
Reduce Bullish Bets
Hedge funds reduced bullish oil bets to a 20-month low as Europe’s worsening debt crisis weakened the region’s economy and currency. Money managers decreased net-long positions, or wagers that prices will rise, for a third week to 136,751 in the seven days ended May 22, according to the Commodity Futures Trading Commission’s Commitments of Traders report on May 25. It was the lowest level since September 2010.
In London, hedge-funds and other money managers reduced bullish bets on Brent crude by 6,417 contracts in the week ended May 22, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 91,208 lots, the London-based exchange said today in its weekly Commitment of Traders report.
Tropical Storm Beryl, the second named weather system of the Atlantic hurricane season, made landfall and was weakening as it moved inland over northeast Florida, according to the U.S. National Hurricane Center. The weather system was 60 miles (100 kilometers) west-northwest of Jacksonville, with maximum sustained winds of 35 miles per hour, the Miami-based center said in its 11 a.m. advisory.