Oil edged up for a second day in New York on speculation that Greek Prime Minister George Papandreou will win a confidence vote today, moving the country a step closer to avoiding a default on its debt.
Futures climbed 14 cents and the euro rose against the dollar after European leaders said Greece can avoid a default. The weaker U.S. currency boosted commodities’ appeal as an alternative investment. Oil briefly fell after the International Energy Agency said Saudi Arabian oil production may be rising.
“If the Greeks can pass the confidence vote, the effect on equities and the dollar will provide more support for oil prices,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Oil for July delivery settled at $93.40 a barrel on the New York Mercantile Exchange. Futures have advanced 20 percent in the past year. Trading on the July contract expired today. The more actively traded August contract gained 54 cents, or 0.6 percent, to $94.17 a barrel.
Prices fell from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles decreased 81,000 barrels to 363 million. August oil slipped 2 cents to $93.61 a barrel in electronic trading at 4:31 p.m.
European Union leaders have insisted Papandreou gain multiparty support for austerity measures that are a condition for the aid needed to avoid default as soon as next month.
The euro gained 0.7 percent against the dollar to $1.4402 at 3:12 p.m. in New York. Earlier, it touched $1.4423, the highest level since June 15.
The Standard & Poor’s 500 Index gained 1.3 percent to 1,295.52, its biggest rally since April 20. The Dow Jones Industrial Average increased 109.63 points, or 0.9 percent, to 12,190.01.
Earlier, crude tumbled as much as 0.8 percent after David Fyfe, head of the IEA’s industry and markets division, said that the agency is seeing signs Saudi oil production is rising.
A Saudi industry official with knowledge of the matter said June 10 that the Saudi Arabian Oil Co., the kingdom’s state oil company, will pump more crude. The official declined to be identified.
The official’s comments followed a June 8 meeting of the Organization of Petroleum Exporting Countries at which members failed to reach a consensus on a Saudi proposal to raise output to curb prices around $100 a barrel in New York. The kingdom is OPEC’s largest producer and has the bulk of its spare capacity.
“There are indications that Saudi production is increasing,” Fyfe said in Washington. “At the same time, it takes time for that oil to get to the market, and Saudi domestic crude utilization will probably also be increasing in June and July.”
Saudi Arabia burns petroleum during the hottest part of the year to generate electricity for its own population, boosting domestic consumption in the summer months. The IEA forecast earlier this month that third-quarter oil demand in the kingdom will jump 5.6 percent from the year-earlier period to 3.19 million barrels a day.
The IEA is also monitoring markets to determine whether members need to release reserves. Brent crude fell after the IEA comments.
“Rising Saudi Arabian oil production has finally registered with Brent crude traders,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “This added supply is what’s ultimately putting downward pressure on prices.”
Venezuela’s Oil Ministry also reported that production in the OPEC member rose to 2.82 million barrels a day in April from 2.75 million barrels a year earlier, according to an e-mailed report.
Brent oil for August delivery fell 74 cents, or 0.7 percent, to $110.95 a barrel on the London-based ICE Futures Europe exchange. Prices have advanced 41 percent in the past year. Brent cost $16.78 a barrel more than Nymex August futures, down from a record $23.32 a barrel last week.
U.S. crude supplies probably fell last week for the third consecutive time, according to the median of 16 analyst estimates in a Bloomberg News survey.
U.S. inventories dropped 1.83 million barrels, or 0.5 percent, to 363.7 million in the seven days ended June 17, according to the analysts surveyed before the Energy Department’s report. Thirteen of the respondents forecast a decline, two projected a gain and one said there was no change.
The Energy Department is scheduled to release its supply report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute will report its own data today.
Stockpiles of crude oil in China fell 3.5 percent at the end of May from a month earlier, according to China Oil, Gas & Petrochemicals, a newsletter published every two weeks by the official Xinhua News Agency. The U.S. and China are the world’s two largest oil-consuming countries.
Oil volume in electronic trading on the Nymex was 509,507 contracts as of 3:14 p.m. in New York. Volume totaled 568,531 contracts yesterday, 14 percent below the average of the past three months. Open interest was 1.53 million contracts.