Oil Rises in New York After ECB Says Euro Will Survive
Oil gained in New York, paring this week’s decline after a European Central Bank pledge that the euro will survive reassured investors and better-than-forecast U.S. data underpinned confidence in the world’s biggest economy.
Futures rose as much as 1.7 percent after ECB President Mario Draghi signaled that officials are prepared to do whatever is needed to preserve the euro and act on surging bond yields that are tearing at the seams of the 17-nation currency bloc. Orders for U.S. durable goods climbed more than projected in June and fewer Americans than forecast filed for unemployment insurance payments last week.
“The biggest problem of this market is a lack of trust, and Draghi’s comments are bringing the back that trust, and with it, confidence,” said Eugen Weinberg, head of commodity market research at Commerzbank AG in Frankfurt, who predicts any further gains in oil will be capped by “plentiful” supplies.
Crude for September delivery rose as much as $1.47 to $90.44 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.19 at 1:46 p.m. London time. The contract yesterday rose 47 cents to $88.97, the highest close since July 20. Prices have lost 1.4 percent this week.
Brent oil for September settlement on the London-based ICE Futures Europe exchange rose $1.51 to $105.89 a barrel. The European benchmark crude was at a $15.70 premium to the New York contract. The spread closed at $15.41 yesterday, the widest in seven weeks.
Economists said Draghi’s comments suggest the ECB may be preparing to unveil new measures to fight the crisis as potential bailouts for economies the size of Spain and Italy threaten to overwhelm Europe’s rescue funds. The euro gained 1.3 percent to $1.2313 after losing 0.3 percent to $1.2118.
U.S. bookings for goods meant to last at least three years rose 1.6 percent for a second month, a Commerce Department report showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 0.3 percent gain, the Commerce Department said today in Washington.
Applications for jobless benefits decreased by 35,000 in the week ended July 21 to 353,000, Labor Department figures showed today. Economists forecast 380,000 claims, according to the median estimate in a Bloomberg News survey.
Oil in New York has technical support around $86 a barrel, along the lower of two so-called leading span lines that define an “ichimoku cloud” on the daily chart, according to data compiled by Bloomberg. That’s an area where buy orders tend to be clustered. Crude started a descent in early May to an almost nine-month low after falling out of an ichimoku cloud.
Gasoline stockpiles rose 4.1 million barrels in the week ended July 20 to 210 million, the highest in three months, the Energy Department report showed yesterday. Distillate inventories, a category that includes heating oil and diesel, climbed 1.7 million barrels to 125 million, according to the Energy Department.
“Our industry continues to see significant price volatility as a result of economic and political developments,” Peter Voser, chief executive officer of Royal Dutch Shell Plc (RDSA), said today in the company’s second-quarter earnings statement.
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