Oil Trades Near Four-Day High on Stimulus Outlook, Iran

Oil traded near the highest price in four days in New York as policy makers in the U.S. and Europe indicated they may take steps to boost their economies and Iran signaled it will take a hard line in nuclear talks.

Futures were little changed after rising as much as 0.9 percent. Federal Reserve Vice Chairman Janet Yellen said the U.S. remains vulnerable to setbacks that may warrant additional monetary stimulus, while European Central Bank President Mario Draghi said officials are ready to act as the euro area’s outlook worsens. Oil may rebound on policy measures, according to Goldman Sachs Group Inc. Iran pulled back from an agreement on nuclear inspections before talks this month.

“It’s renewed optimism about a coordinated stimulus program,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “I think we’ll see a little bit more of a build in the Middle Eastern premium as we lead into that meeting.”

Oil for July delivery was at $85.20 a barrel, up 18 cents, in electronic trading on the New York Mercantile Exchange at 2:21 p.m. Singapore time. The contract yesterday rose 0.9 percent to $85.02, the highest close since May 31. Prices are 14 percent lower this year.

Brent oil for July settlement was at $100.57 a barrel, down 7 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $15.37, from $15.62 yesterday.

Price Rebound

Prices extended their gains after a report showed Australian employers unexpectedly added workers in April. The number of people employed rose by 38,900, the statistics bureau said in Sydney today. That compares with the median estimate for no change in a Bloomberg News survey of 23 economists.

Oil in New York, which fell 17 percent in May for the biggest monthly drop in more than three years, may rebound if policy makers take steps to contain the European debt crisis and counter weaker economic growth in the U.S. and China, Goldman Sachs said in e-mailed report today.

Goldman reiterated its call to buy West Texas Intermediate crude futures for September delivery. The recommendation, first made on Feb. 22, has so far generated a “dismal” loss of $22.72 a barrel, it said.

Prices may also gain as sanctions tighten on Iran and a surplus caused by increased output from Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, is eroded, according to the report.

Iran Tension

Iran, OPEC’s second-biggest crude producer, faces additional European Union sanctions starting July 1 because of its nuclear program. The embargo will remove about 1 million barrels of oil from the market, the International Energy Agency estimates.

Iran will “never suspend” its enrichment of uranium and “will not permit our national security to be jeopardized” by International Atomic Energy Agency inspectors working for Western intelligence agencies, Ali Asghar Soltanieh, the nation’s envoy to the IAEA, told reporters in Vienna yesterday.

Soltanieh contradicted IAEA Director General Yukiya Amano’s May 22 announcement that a decision had been made to allow inspectors increased access to nuclear sites. The Persian Gulf nation’s nuclear negotiator Saeed Jalili only pledged his “determination” to reach an accord, Soltanieh said.

Diplomats from China, France, Germany, Russia, the U.K. and the U.S. are scheduled to hold a third round of talks with their Iranian counterparts in Moscow on June 18-19.

U.S. Supplies

Saudi Arabia may rein in oil sales after it achieved a $100-a-barrel target for London-traded Brent by cutting the price of its crude and pumping at the highest rate in at least three decades. The world’s biggest exporter started to scale back shipments this month, according to Vienna-based researcher JBC Energy GmbH, citing tanker fixtures.

U.S. crude stockpiles fell for the first time in 11 weeks. Inventories dropped by 111,000 barrels last week, a report from the Energy Department showed yesterday. They were forecast to decline 500,000 barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.

Supplies at Cushing, Oklahoma, the delivery point for New York-traded futures, increased 926,000 barrels to a record 47.8 million. Domestic oil production rose to 6.25 million barrels a day, the highest level since February 1999.

Gasoline supplies climbed 3.3 million barrels, the Energy Department report showed. They were forecast to gain 950,000 barrels, according to the survey. Distillate stockpiles, a category that includes heating oil and diesel, rose 2.3 million barrels, compared with a projected drop of 250,000 barrels.

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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