Oil advanced in New York, heading for a second quarterly gain, as Europe’s finance ministers met in Copenhagen to increase rescue funds to temper the region’s debt crisis.
Crude rose as much as 0.9 percent, the first gain in three days, as consumer spending in the U.S. jumped in February by the most in seven months, showing the biggest part of the economy is strengthening. Prices fell 2.5 percent yesterday, the biggest drop since December. European equities extended the biggest first-quarter advance since 2006 and the euro gained while default risk fell. For the week, prices are lower after U.S. stockpiles climbed to the highest level since August and Western countries discussed tapping emergency reserves.
“If the finance minister meeting is able to push equities up or down, it should also influence crude,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna who predicts U.S. futures will average $104 this year. “In the short-to-medium term it does seem the worst of the crisis is over. In the longer term, euro countries have to prove the bunch of measures taken to stabilize their budgets have been successful.”
Oil for May delivery gained as much as 91 cents to $103.69 a barrel in electronic trading on the New York Mercantile Exchange. It was at $103.58 at 1:47 p.m. London time, up 4.8 percent for the quarter. That would follow a gain of 25 percent in the last quarter of 2011.
U.S. purchases climbed 0.8 percent, the most since July, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase. Incomes advanced less than projected, sending the saving rate down to the lowest level in more than two years.
Prices slumped yesterday to $102.78, the lowest close since Feb. 16. West Texas Intermediate futures are down 3.1 percent this week for a third weekly decline, the longest losing streak since August.
Brent oil for May settlement gained $1.21, or 1 percent, to $123.60 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded WTI was at $20.02, compared with yesterday’s close of $19.61, the widest settlement in five months.
New York crude settled below its lower Bollinger Band for the first time in almost two months yesterday, according to data compiled by Bloomberg. This indicator is at $103.40 a barrel today. Bollinger Bands indicate support and resistance levels based on volatility and are used by investors to determine entry points for buying or selling contracts.
Prices fell this week after a March 28 report from the Energy Department said U.S. crude stockpiles climbed 7.1 million barrels to 353.4 million barrels, the highest level since the period ended Aug. 26. They were forecast to increase 2.6 million barrels, according to a Bloomberg News survey.
Rescue Lending Cap
European governments capped fresh rescue lending at 500 billion euros ($666 billion), bringing the overall size of the firewall to 800 billion euros, according to a statement after a meeting in Copenhagen today. Efforts to raise the firewall will succeed in tempering the debt crisis, German Finance Minister Wolfgang Schaeuble said yesterday.
Prices extended declines yesterday after French Prime Minister Francois Fillon said consumers can “reasonably expect” a release from emergency petroleum stockpiles. Governments are closer to an agreement on the use of the reserves, he told France Inter Radio. The International Energy Agency said it’s ready to coordinate a release if there is a serious supply disruption.
Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries, has raised concern about supply by threatening to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil, in response to sanctions.
Pressure on Region
“Any rhetoric concerning the tightening of sanctions will increase pressure on the region, and as a result you have to expect it to extend to oil prices,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “We did break below the very important support of $104 a barrel, and I think we’ve had a technical reaction on the back of that.”
U.S. Representatives Ted Deutch, a Florida Democrat, and Robert Dold, an Illinois Republican, introduced the Iran Energy Sector and Proliferation Sanctions Act in Congress yesterday. The measure is the latest in a stepped-up campaign to tighten sanctions aimed at depriving the Persian Gulf nation of revenue for its nuclear and missile programs.
The nuclear program is growing, breaching United Nations resolutions amid an “alarming” escalation over the country’s plans, Russian Deputy Foreign Minister Sergei Ryabkov said in an interview in New Delhi.
New York crude may decline next week on concern that the European and Chinese economies will slow, reducing fuel demand, according to a Bloomberg News survey. Sixteen of 26 analysts, or 62 percent, forecast oil will fall through April 6. Three respondents, or 12 percent, predicted prices will rise and seven estimated there will be little change. Last week, 57 percent of surveyed analysts expected a drop.