Oil rose for a second day in New York, reversing earlier losses as European leaders pressured Greece into proceeding with a rescue package that may stem the region’s debt crisis.
West Texas Intermediate futures rebounded from a 1.8 percent decline before a Group of 20 summit set to begin today in Cannes, France. Led by Germany and France, Europe’s economic and political anchors, the euro’s guardians yesterday cut off financial aid for Greece until an early December vote determines whether it deserves a fresh batch of loans.
“Market sentiment about the success of the rescue package seems to change within hours,” said Carsten Fritsch, a Frankfurt-based analyst at Commerzbank AG, who forecasts Brent crude oil will average $100 a barrel this quarter. “We expect Europe to slip into recession, but it will be just a brief and shallow one.”
Crude for December delivery rose as much as 91 cents, or 1 percent, to $93.42 a barrel and was at $93.07 in electronic trading on the New York Mercantile Exchange at 12:06 p.m. London time. It earlier fell as low as $90.87 a barrel.
Brent for December settlement traded 34 cents higher at $109.68 a barrel on the London-based ICE Futures Europe exchange. Brent’s premium to New York crude was $16.61 a barrel, compared with settlements of $16.83 yesterday and a record-high $27.88 on Oct. 14.
In or Out
European leaders raised the prospect of the euro area splintering, forcing Greece to decide whether it’s in or out when it holds a referendum on a bailout package next month.
“The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?” German Chancellor Angela Merkel told reporters in Cannes. French President Nicolas Sarkozy said Prime Minister George Papandreou’s government won’t get a “single cent” of assistance if voters reject the plan.
New York crude may test $100 a barrel if it closes above the 200-day moving average, according to a technical analysis from Again Capital LLC. The average was at $94.81 today.
Crude is poised to breach resistance after touching $94.65 on Oct. 25, the highest intraday price since Aug. 2, said John Kilduff, a partner at Again Capital, a New York-based hedge fund focusing on energy.
“We’re just below the 200-day moving average, a critical target,” Kilduff said in a telephone interview yesterday. “A breakthrough would be a strong sign that futures are moving to the upside. There will be a decent amount of follow through and it would argue for a retest of $100 fairly rapidly.”
U.S. crude supplies increased 1.83 million barrels to 339.5 million in the week ended Oct. 28, the U.S. Energy Department said yesterday. That was more than the 1 million barrels forecast by analysts in a Bloomberg News survey.
Gasoline stockpiles gained 1.36 million barrels to 206.3 million. The median estimate was a decline of 800,000. Inventories of distillate fuels, which include heating oil and jet fuel, dropped 3.58 million barrels to 141.9 million. The median estimate was a decline of 1.75 million.
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