Oil Trades Near Three-Week High After Germany Approves Fund Plan
Oil traded near its highest in almost three weeks as Germany’s top constitutional court cleared the way for a permanent euro-area rescue fund and speculation grew that China and the U.S. will boost stimulate measures.
Crude rose above $98 a barrel for the first time since Aug. 23 after the Federal Constitutional Court in Germany dismissed motions filed by groups trying to block the fund, known as the European Stability Mechanism. The International Energy Agency raised global oil demand forecasts for this year and next. Chinese Premier Wen Jiabao said his government has more room for fiscal and monetary policy to support growth. The U.S. Federal Open Market Committee starts a two-day meeting today, which may culminate in additional efforts to boost the economy.
“The German ruling is positive from a risk-appetite and market-confidence point of view,” said Harry Tchilinguirian, head of commodity markets at BNP Paribas SA in London. “With the ruling and anticipation of the announcement of a third round of quantitative easing by the Fed, risky assets including oil are getting a boost.”
Crude for October delivery advanced as much as 89 cents, or 0.9 percent, to $98.06 a barrel in electronic trading on the New York Mercantile Exchange, and was down 4 cents at $97.13 at 2:11 p.m. London time. The contract yesterday rose 0.7 percent to $97.17, the highest close since Aug. 22. Prices are 1.7 percent lower this year.
Brent oil for October settlement on the London-based ICE Futures Europe exchange climbed 52 cents to $115.92 a barrel. The European benchmark crude was at a premium of $18.77 to New York-traded West Texas Intermediate grade, up from $18.23 yesterday.
The price difference between the world’s two most-traded varieties of crude, which widened to $21.92 a barrel last month, is narrowing as North Sea production rebounds from the lowest level in five years. Daily exports of the four crude grades comprising the Dated Brent benchmark will increase 24 percent in October, the most in two years, as maintenance work ends, data compiled by Bloomberg shows.
U.S. crude stockpiles probably fell 2.9 million barrels, or 0.8 percent, to 354.2 million in the seven days ended Sept. 7, according to a Bloomberg News survey of analysts before an Energy Department report today.
The U.S. ambassador to Libya, Christopher Stevens, was killed in an attack on the consulate in Benghazi as protests flared in the North African country and neighboring Egypt against a film about the Prophet Muhammad. Libya holds Africa’s largest crude reserves.
The Paris-based IEA predicts that world oil consumption will increase by 800,000 barrels a day, or 0.9 percent, in both 2012 and 2013, reaching 90.6 million a day next year. That’s about 90,000 a day more than estimated last month. The agency said inventories have become “more comfortable” and didn’t specify whether members should release emergency reserves to tame prices, a move discussed last month by leaders in the U.S., U.K. and France.
China has “ample strength” for pre-emptive fiscal and monetary measures, Wen said at the World Economic Forum in the Chinese city of Tianjin yesterday. The government is trying to prevent growth this year from slipping below the 7.5 percent target set in March, which would already be the weakest since 1990.
Fed Chairman Ben S. Bernanke said on Aug. 31 that he wouldn’t rule out more economic stimulus for the U.S. The central bank bought a total of $2.3 trillion in bonds from December 2008 to June 2011 in two rounds of asset purchases known as quantitative easing.
“The market is waiting on the outcome of the FOMC meeting and data from the Energy Department,” said David Lennox, an analyst at Fat Prophets in Sydney.
Oil in New York has technical resistance along the upper Bollinger Band on the daily chart, around $99.37 a barrel today, according to data compiled by Bloomberg. Futures have halted advances near this indicator since July. Sell orders tend to be clustered near chart-resistance levels.
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