Crude Oil Rebounds From Near Six-Week Low in New York as Equities Advance
Oil recovered from near its lowest in more than six weeks in New York as advancing equity markets eased concern that European government measures will be unable to stem the debt crisis.
Oil erased earlier losses of as much as 1.1 percent to trade near $94 a barrel as the Stoxx Europe 600 Index advanced. European Union finance ministers will hold a conference call today addressing a deadline for drawing additional aid and creating new budget rules. Bank of America Corp. said an Iranian production halt could boost prices as much as $40 a barrel.
“There are enough contradictory pressures on the oil market to go into the holidays with a neutral position,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, who correctly predicted earlier this month that prices would slide. “On the bearish side there is the risk of European downgrades, but there’s also the risk of tougher rhetoric against Iran.”
Crude for January delivery on the New York Mercantile Exchange was up 26 cents at $93.79 a barrel at 1:02 p.m. London time. The contract, which expires tomorrow, fell as low as $92.52 on Dec. 16, the lowest price since Nov. 3. The more actively traded February futures were at $94, up 25 cents. Prices are 2.6 percent higher this year after rising 15 percent in 2010.
Brent oil for February settlement on the London-based ICE Futures Europe exchange was at $103.97 a barrel, up 62 cents, after declining as much as 98 cents, or 1 percent, to $102.37 a barrel. The European benchmark contract was at a premium of $9.97 to New York-traded West Texas Intermediate for the same month. The front-month spread was a record $27.88 on Oct. 14.
Iran Production
Oil prices may surge by $40 a barrel if international sanctions halt supplies from Iran, Bank of America Corp. said, amid signs that an alliance of nations is readying tougher measures against the Persian Gulf producer. Eleven countries in a coalition that includes the U.S. and European and Arab states will meet tomorrow in Rome to discuss harder tactics, the Wall Street Journal reported, citing people it didn’t identify.
Euro-area finance ministers will hold a conference call at 3:30 p.m. Brussels time to discuss 200 billion euros ($260 billion) in additional funding through the International Monetary Fund and the mechanics of a so-called fiscal compact that was negotiated at a Dec. 9 summit, according to two people familiar with the planning.
The 27 European Union member states accounted for 16 percent of global oil consumption in last year, based on BP Plc’s Statistical Review of World Energy.
OPEC Agreement
OPEC’s 30 million-barrel-a-day oil production limit may boost prices next year, according to Goldman Sachs Group Inc. The Organization of Petroleum Exporting Countries is pumping 700,000 barrels a day above the target and will have to cut output as supplies increase from Iraq and Libya, David Greely, the bank’s head of energy research in New York, said in a report yesterday. The 12-member group set a new output ceiling for the first time in three years at its Dec. 14 meeting in Vienna.
Hedge-funds and other money managers cut bullish bets on Brent crude by 5,654 contracts, or 6.6 percent, in the week ended Dec. 13, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 79,933 lots, the London-based exchange said today in its weekly Commitment of Traders report.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
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