Crude oil rose for a second day as equity markets reversed losses, increasing expectations that a recovering economy will support fuel demand.
Oil climbed above $70 a barrel in New York after Asian stocks gained, led by Chinese equities on speculation the world’s second-largest consumer of oil may delay measures to cool its economy. Germany’s parliament on May 21 approved the country’s portion of the $1 trillion euro-region bailout plan.
“You’re seeing a good, fast response back into the equity markets,” said David Land, chief market analyst at CMC Markets Ltd. in Sydney. “If there is renewed expectation that we’ll see a cooling in the situation in Europe, that will translate into a bit of upside for the oil price.”
Crude oil for July delivery rose as much as 92 cents, or 1.3 percent, to $70.96 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $70.91 a barrel at 3:32 p.m. Singapore time. Prices earlier fell as much as 43 cents, or 0.6 percent, to $69.61.
Futures slumped as low as $64.24 on May 20, the cheapest intraday price for the near-month contract since July 2009. Prices are down 19 percent from a 19-month high of $87.15 reached on May 3.
The MSCI Asia Pacific Index increased 0.4 percent to 112.47 as of 2:13 p.m. Tokyo time, with 12 stocks rising for every seven that dropped. The gauge had fallen 13 percent from its high this year on April 15 on concern China’s steps to curb asset bubbles and mounting budget deficits in some European countries will derail global growth.
U.S. Home Sales
Oil also rose before a U.S. report today that is expected to show sales of previously owned homes probably climbed in April. Purchases increased 5.6 percent to a 5.65 million annual rate, according to the median of 56 forecasts in a Bloomberg News survey.
“Energy prices were weak last week,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “Expect more of the same this week unless today’s home sales number and tomorrow’s consumer confidence numbers are exceedingly bullish.”
A weather system about 500 miles (804 kilometers) south-southwest of Bermuda has a 30 percent chance of becoming the Atlantic Hurricane Season’s first storm, according to the National Hurricane Center. The system, which is producing a large area of rain and thunderstorms, is expected to move north-northwest, according to the hurricane center’s bulletin.
Brent crude oil for July settlement rose as much as 58 cents, or 0.8 percent, to $72.26 a barrel on the ICE Futures Europe exchange in London and traded at $72.02 a barrel at 3:42 p.m. Singapore time. Prices slipped 16 cents to $71.68 on May 21, the lowest settlement since Feb. 8.
Hedge funds and other large speculators reduced their bets on rising oil prices to a three-month low last week, according to U.S. Commodity Futures Trading Commission data.
Speculative net-long positions, the difference between orders to buy and sell the commodity, dropped 27 percent in the week ended May 18, to 67,361 contracts on the New York Mercantile Exchange, the lowest since Feb. 12.
The top U.S. commodity regulator is poised to impose new rules on oil speculators as Congress and the European Commission attempt to rein in trading in the $615 trillion over-the-counter derivatives market.