June 30 (Bloomberg) -- Oil rose for a third day, trimming its first quarterly loss in a year, as traders bet U.S. demand may be strengthening and Greece prepared for a second vote on austerity measures designed to prevent a debt default.
Futures advanced as much as 0.7 percent, extending the biggest two-day rally in seven weeks. The U.S. Energy Department said yesterday inventories fell almost four times as much as projected by analysts and Greece’s parliament backed Prime Minister George Papandreou’s package of budget cuts and asset sales. Oil also climbed as Arlene, the first tropical storm of the Atlantic hurricane season, moved toward the Mexico coast.
“The Greek situation has provided some optimism,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 a barrel this year. “Combined with inventory data, which is very strong, and a memory of the hurricane season with Arlene coming through, it’s given us this unique driving factor.”
Crude for August delivery rose as much as 67 cents to $95.44 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.25 at 3:14 p.m. Singapore time. The contract climbed yesterday $1.88 to $94.77, completing a two-day gain of 4.6 percent, the most since May 10.
Oil has erased losses after tumbling below $90 a barrel June 23 when the International Energy Agency announced the release of 60 million barrels from strategic reserves, including 30 million from the U.S. Prices have since rallied more than 4 percent and are 26 percent higher the past year.
‘Crescendo of Events’
Brent oil for August settlement traded 27 cents higher at $112.67 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $17.49 to West Texas Intermediate, the U.S. benchmark grade. The spread reached a record $22.29 a barrel on June 15.
“It’s a crescendo of events that is supporting prices,” Barratt said. Oil in New York may “trade back to $100 a barrel.”
Oil is down 11 percent in the second quarter, the first decline since the period ended June 30, 2010, after Europe’s debt crisis bolstered speculation fuel demand will shrink.
Greek lawmakers voted to approve the austerity plan designed to meet European Union aid requirements and stave off a debt default that may have disrupted the European economy. A debate on the second stage of the austerity package resumes at 10 a.m. in Athens, with no time given for the final vote.
U.S. crude supplies dropped to 359.5 million barrels, according to the Energy Department. The fourth week of declines is the longest streak since the six weeks ended Jan. 7. Imports fell 3 percent to 8.88 million barrels a day, the first drop in three weeks, Energy Department data shows.
Arlene is moving toward the eastern coast of Mexico, where the government has issued a hurricane watch. “Some strengthening is forecast and Arlene could become a hurricane prior to landfall,” the Miami-based National Hurricane Center said in an advisory before 8 p.m. East Coast time yesterday.
Petroleos Mexicanos, Latin America’s largest producer, has wells in the area. Mexico is the second-biggest oil exporter to the U.S., after Canada, supplying 1.19 million barrels a day in March, the last month for which Energy Department figures are available.
Oil’s advance in New York may stall along its middle Bollinger Band, a technical indicator that halted a rally above $100 a barrel three weeks ago. This level is at $97.27 today, according to data compiled by Bloomberg. Prices are approaching the 200-day moving average for August futures, at $96.05 a barrel today. A breach of technical resistance usually means prices will continue to rise.
Futures also rose amid speculation the Organization of Petroleum Exporting Countries may reduce output in response to IEA’s release of reserves. Saudi Arabia, OPEC’s largest producer, will proceed with plans to ensure the global market has enough crude, regardless of what the IEA does, a person familiar with policy at the oil ministry said.
Saudi Arabia estimates that consumption will rise by 1.2 to 1.5 million barrels a day in 2012 from this year’s level and the kingdom will contribute to meeting that demand, according to the person, who declined to be identified because he isn’t authorized to speak on the matter.
To contact the reporter on this story: Ben Sharples in Melbourne at firstname.lastname@example.org
To contact the editor responsible for this story: Alexander Kwiatkowski at email@example.com