Oil traded near a four-day high in New York on speculation that the U.S. Federal Reserve may take more steps to stimulate the economy and on OPEC’s call for members to cut production in excess of targets.
Futures were little changed after climbing as much as 1.1 percent. A report showed yesterday that the cost of living in the U.S. fell by the most in more than three years. The Organization of Petroleum Exporting Countries needs to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary-General Abdalla El-Badri said.
Oil’s rise was “a reaction to the OPEC comments yesterday that they should adhere to the target of 30 million barrels a day,” Torbjoern Kjus, an oil analyst at DnB NOR ASA, said by phone from Oslo. “We won’t see aggressive cuts from Saudi Arabia unless we fall $10 to $15 below current prices.”
Oil for July delivery rose as much as 89 cents to $84.80 a barrel in electronic trading on the New York Mercantile Exchange, the highest since June 11. The contract added 1 cent to $83.92 at 1:54 p.m. London time. The contract increased 1.6 percent yesterday to $83.91, the highest settlement since June 8. Prices are down 15 percent this year.
Brent crude for August settlement on the London-based ICE Futures Europe exchange gained 8 cents, or 0.1 percent, to $97.11 a barrel. The European benchmark contract’s premium to New York futures narrowed to as little as $12.37 a barrel today.
Commodities gained on speculation central banks will take steps to boost economies as Europe’s debt crisis saps growth. Bank of England Governor Mervyn King said late yesterday the case for more stimulus in the U.K. “is growing.” Federal Reserve policy makers start a two-day meeting on June 19.
Saudi Arabia will make sure there is enough supply in the global oil market, the kingdom’s oil minister said today.
“The whole idea is that there will not be any shortages in the market,” Ali al-Naimi told Bloomberg News in Vienna. “That has been Saudi Arabia’s policy all along. To manage stability of the oil market, keeping it in balance.”
Oil in New York is extending gains after yesterday’s rebound created a so-called bullish engulfing pattern on the daily candlestick chart, according to data compiled by Bloomberg. Crude has long-term technical support along its 200- week moving average, around $80.81 a barrel. Buy orders tend to be clustered near chart-support levels.
OPEC kept its output limit at 30 million barrels a day at a meeting in Vienna yesterday as concern that global growth is shrinking outweighed calls by some members for supply cuts to stem sliding prices. Increased production from Saudi Arabia, the world’s biggest crude exporter, has been blamed for the drop in prices by members including Iran, whose own exports will probably be curbed by a European Union embargo scheduled to start July 1. OPEC’s 12 members pump about 40 percent of the world’s crude.
“There are more supportive factors now for oil than there are negative,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “The whole purpose of the cartel is to provide guidelines to production. Compliance is just a word. If the price slips below $80 a barrel then quotas will change and give prices a big bump.”
South Korea’s crude imports from Iran in May fell 40 percent from a year earlier, the customs service said today. The world’s fifth-largest oil importer purchased 550,714 metric tons, or about 17,765 tons a day, from Iran last month, compared with 911,889 tons a year earlier, it said on its website.
The cost of living in the U.S., the world’s biggest crude consumer, fell in May by the most in more than three year. The consumer-price index declined 0.3 percent, more than forecast and the biggest drop since December 2008, after no change the prior month, the Labor Department reported yesterday in Washington.
Oil in New York may fall next week on speculation that Europe’s debt crisis will spread after the downgrade of Spain’s credit rating and weekend elections in Greece, a Bloomberg News survey showed. Seventeen of 39 analysts and traders, or 44 percent, forecast crude will decline through June 22. Fifteen respondents, or 38 percent, predicted futures will increase and seven said there will be little change.
China is hoarding crude at the fastest rate since the Beijing Olympics four years ago as oil’s slump prompts the country to import unprecedented volumes, even as refining slows.
The world’s second-biggest oil consumer built a surplus of about 90 million barrels of crude in the first five months of the year, government data show. The excess, the highest since the run-up to the 2008 games, is probably being kept at emergency and commercial storage centers, according to the International Energy Agency.
To contact the editor responsible for this story: Stephen Voss at firstname.lastname@example.org