Oil Rebounds From Two-Day Low in New York; Brent Premium Widens on Weather
Oil rebounded from a two-day low before international creditors decide on a bailout for Greece. Brent crude’s premium to West Texas Intermediate widened a ninth day amid freezing temperatures in Europe.
Futures gained as much as 0.6 percent after sliding 1 percent yesterday to near a technical support level. Greek Prime Minister Lucas Papademos plans to meet the nation’s political leaders today to discuss additional measures needed to secure a second European Union-led bailout. Brent prices rose for a sixth day as record-low temperatures in Europe boost fuel demand.
“Weather conditions appear to be the key reason for the disparity between the two crude oil grades, with Europe dealing with unseasonably cold weather and the U.S. experiencing mild weather conditions,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today.
Oil for March delivery gained as much as 53 cents to $97.44 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.36 at 1:15 p.m. Sydney time. The contract yesterday fell 93 cents to $96.91, the lowest settlement since Feb. 2. Prices are down 1.5 percent this year.
Futures are rebounding after settling above technical support along the lower Bollinger Band yesterday, according to data compiled by Bloomberg. This indicator is around $96.33 a barrel today. Buy orders tend to be clustered near chart-support levels.
Brent oil for March settlement advanced 59 cents to $116.52 a barrel on the ICE Futures Europe exchange. The benchmark contract’s premium to New York-traded West Texas Intermediate widened to $19.16, the biggest gap based on closing prices since Oct. 24. The spread was a record $27.88 on Oct. 14.
Temperature Drop
Temperatures have plunged across Europe, reaching as low as minus 50 Celsius (minus 58 Fahrenheit) in parts of Kazakhstan and minus 30.2 Celsius in the Russian city of Smolensk. Snow has blanketed London and fallen in Italy as far south as Naples. U.K. natural gas surged 27 percent yesterday as National Grid Plc forecast demand for the heating fuel will rise 16 percent above the seasonal norm.
Petroleos Mexicanos, the state-owned oil company, closed a second crude-export terminal in the Gulf of Mexico after weather conditions worsened. The facility at the port of Coatzacoalcos was shut, Mexico’s Merchant Marine said yesterday in a weather bulletin on its website.
An Energy Department report tomorrow may show crude inventories in the U.S. rose for a third week while gasoline use fell to a 10-year low, according to a Bloomberg News survey of analysts. Supplies probably climbed 2.5 million barrels last week, according to the median of 7 analyst estimates. Gasoline stockpiles increased 500,000 barrels for a second weekly gain and inventories of distillates, a category that includes diesel and heating oil, dropped 1 million barrels, the survey shows.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
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