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Crude Is Steady Near $79 a Barrel After Home Sales Rise, Storm Spares Gulf
Crude oil closed unchanged in New York trading as sales of new U.S. homes rose more than forecast and Tropical Storm Bonnie dissipated without damaging production platforms and refineries.
Crude rebounded from an early decline after the Commerce Department said home purchases climbed 24 percent in June to an annual pace of 330,000. Equities advanced on the increase, which followed a May slump triggered by the end of a tax credit. Oil workers returned to the Gulf after storm evacuations.
“We had a housing number that wasn’t as bad as some guys have been looking for, and that was somewhat bullish for equities, which dragged oil up,” said Rich Ilczyszyn, a senior market analyst with broker Lind-Waldock in Chicago. “We sold off pretty good overnight as the storm turned into nothing.”
Oil for September delivery settled at $78.98 a barrel today on the New York Mercantile Exchange, unchanged from July 23. It was the first day since September that oil closed unchanged. Prices are down 0.5 percent this year. Oil reached $79.30 a barrel July 22, the highest level since May 5.
The Standard & Poor’s 500 Index rose 1.1 percent to 1,115.01 as of 4:01 p.m. in New York. The Dow Jones Industrial Average rose 1 percent to 10,525.43.
“It’s going to take better macroeconomic news or perhaps storm activity in the Gulf of Mexico to spring prices from their narrow trading range,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.
Front-month futures prices haven’t settled below $70 since May 25 or above $80 since May 4. The 30-day range is $71.09 to $79.60.
U.S. Economy
The U.S. economy probably expanded at a slower pace in the second quarter as the trade deficit swelled, economists said before reports this week.
Gross domestic product rose at a 2.5 percent annual pace after increasing at a 2.7 percent rate in the first quarter, according to the median estimate of 79 economists surveyed by Bloomberg News before a July 30 Commerce Department report.
Earlier, crude declined to $78.06 after Bonnie degenerated July 24. BP Plc vessels returned to the U.S. Gulf to permanently plug a damaged well, the source of the largest oil spill in U.S. history.
“You’re definitely seeing a move back after the storm fears,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston. “We’re trying to find a place to settle in at after we get that out of the way.”
The dollar weakened for a third day against the euro, boosting the appeal of commodities as an alternative investment. The euro increased 0.7 percent to $1.2995 from $1.2909 July 23.
Venezuelan Imports
Venezuelan President Hugo Chavez said yesterday that his country would suspend oil shipments to the U.S. if a military attack were to be launched from Colombian territory. In a speech on state television, he accused the U.S. of planning to assassinate him.
The U.S. imported an average 851,000 barrels a day of oil from Venezuela in April, or 8.7 percent of total imports, according to the latest data from the U.S. Energy Department. That made it the fifth-largest exporter to the U.S. that month, after Canada, Saudi Arabia, Mexico and Nigeria.
Chavez cut Venezuela’s diplomatic relations with Colombia last week after that country’s government made accusations Venezuela is harboring as many as 87 guerilla camps used to smuggle cocaine and launch terrorist attacks across the border.
Iran Sanctions
European Union governments imposed their toughest sanctions yet on Iran, backing U.S. efforts to force the country to halt uranium enrichment and stop any pursuit of nuclear weapons capability. The sanctions include a ban on new investment in or equipment sales to Iran’s oil and natural-gas industries.
Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia. Iran pumped 3.74 million barrels a day of crude in June and has the capacity to produce 4 million barrels a day, according to Bloomberg estimates.
Hedge funds increased their net-long position in crude futures and options on the Nymex by 11,197 to 95,652 for the seven days ended July 20, according to the weekly Commitments of Traders report published July 23 by the Commodity Futures Trading Commission.
Brent crude for September settlement on London’s ICE Futures Europe exchange rose 5 cents to $77.50 a barrel.
Oil volume in electronic trading on the Nymex was 299,257 contracts as of 3:42 p.m. in New York. Volume totaled 391,777 contracts June 23, 45 percent below the average of the past three months. Open interest was 1.24 million contracts.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
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