Futures rebounded from a 1.1 percent loss after a former spokesman for Italian Prime Minister Silvio Berlusconi said that the premier may step down within “hours” and push for early elections. Greek Prime Minister George Papandreou agreed to leave office to allow a national unity government to secure outside financing and avert a collapse of the country’s economy.
“Following optimistic news about a potential resignation of Berlusconi in Italy, and the possible coalition government in Greece, markets might be relieved with potential for a further gains in the oil market for the short-term as concerns about the euro zone’s economic conditions somewhat eased,” said Myrto Sokou, a London-based analyst at Sucden Financial Ltd. “There is still high political instability in the area that will dominate the markets for the rest of 2011.”
Crude for December delivery on the New York Mercantile Exchange was up 52 cents at $94.78 a barrel at 1:01 p.m. London time, after falling as low as $93.23. Oil in New York gained for a fifth week in the five trading days ended Nov. 4, the longest rising streak since the period ended April 3, 2009. Prices are up 3.8 percent this year.
Brent crude for December settlement was $1.34 higher at $113.31 a barrel. The European benchmark contract was at a premium of $18.43 to New York crude, compared with $17.71 on Nov. 4 and a record settlement of $27.88 on Oct. 14.
European finance chiefs were meeting in Brussels today to work on details of a plan to bulk out the region’s bailout fund. Investor concern that Italy will struggle to cut the region’s second-biggest debt load sent the yield on its 10-year bond to about 6.68 percent today. The nation’s parliament votes tomorrow on the 2010 budget report as two Berlusconi allies defected to the opposition last week and a third quit yesterday. Giuliano Ferrara, editor of newspaper Il Foglio and a former Berlusconi spokesman, reported that the premier may step down. Berlusconi later denied the report.
The U.S. is the world’s biggest oil consumer, using 19.1 million barrels a day in 2010, or 21 percent of global consumption, according to BP Plc’s Statistical Review. China is the second-largest, accounting for about 11 percent and the European Union used 16 percent.
Iran Nuclear Program
The International Atomic Energy Agency will probably issue its quarterly report on Iran’s nuclear program this week, according to the Vienna-based agency’s agenda. Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
“Crude prices could be in for another bout of heightened volatility,” on the IAEA’s report, analysts led by David Wech at JBC Energy GmbH in Vienna said in a note. The agency is “expected to be particularly harsh, and although likely falling short of confirming that Iran has the ability to produce nuclear weapons, it may find that the country has been attempting to produce such weapons of mass destruction.”
The U.S. House Foreign Affairs Committee voted last week to tighten sanctions on Iran, partly by targeting Iran’s oil industry. The bill was designed to impose tougher sanctions on Iran’s energy industry, which funds the Persian Gulf nation’s nuclear program.
Hedge-funds and other money managers raised bullish bets on Brent crude by 6,150 contracts, or 12.7 percent, to 54,558 lots in the week ended Nov. 1, according to data from ICE Futures Europe. In the U.S., net-long positions in crude oil slipped 3.6 percent to 190,216, according to the Commodity Futures Trading Commission’s weekly report.
To contact the reporter on this story: Lananh Nguyen in London at email@example.com
To contact the editor responsible for this story: John Buckley at firstname.lastname@example.org