Crude oil advanced in New York, heading for a fourth week of gains, as signs Europe and the U.S. will contain their debt crises eased speculation that demand for raw materials may falter.
Futures climbed for a fourth day after euro-area leaders announced 159 billion euros ($229 billion) in new aid for Greece late yesterday. Prices also rose amid speculation U.S. President Barack Obama may agree a deal to raise the country’s $14.3 trillion debt ceiling before an Aug. 2 deadline.
“There’s more relief over debt measures so there’s this feel-good sense to the equity markets and that’s dragging up the price of oil,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who predicts oil in New York will average $100 a barrel this year. A resolution in the U.S. “will add to this optimism, which should push crude oil through $100 a barrel, even up to $102,” he said.
Crude for September delivery increased as much as 70 cents, or 0.7 percent, to $99.83 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.77 at 4:07 p.m. Sydney time. The contract yesterday gained 73 cents to $99.13, the highest since June 14. Prices are up 2.6 percent this week and have climbed 26 percent the past year.
Brent oil for September settlement rose 61 cents, or 0.5 percent, to $118.12 on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $18.37 a barrel to U.S. futures, compared with a record close of $22.63 on July 14.
Oil climbed as Asian stocks advanced, with the regional benchmark index erasing its loss for the year. The MSCI Asia Pacific Index gained 1.1 percent, heading for its highest close since May 5.
European leaders empowered their 440 billion-euro rescue fund to buy debt across stressed nations, helping to erect a firewall around Spain and Italy even as they risked temporary default to lighten the Greek debt burden.
U.S. President Barack Obama and House Speaker John Boehner have pressed for a broad agreement to boost the U.S. debt limit while cutting spending by trillions of dollars and overhauling the tax code.
Crude in New York rose yesterday after the International Energy Agency said it won’t extend a release of oil supplies.
The IEA said that while it’s prepared to “augment” the sale of 60 million barrels of emergency oil stockpiles first announced on June 23, this intervention and higher output from the Organization of Petroleum Exporting Countries will for now “substantially cover” the loss of exports caused by an armed conflict in Libya.
The Libyan revolt, which began in February, has reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell 50,000 barrels, or 25 percent, to 150,000 barrels a day last month, a Bloomberg News survey showed, the lowest amount in yearly data since 1962. It pumped 1.59 million barrels in January, before the uprising.
The IEA’s action was the third time the agency has coordinated the use of emergency stockpiles since it was founded in 1974. The first was during the 1991 Persian Gulf War and the second in 2005 when Hurricane Katrina struck the Gulf of Mexico.