Oil rose in New York, reversing earlier losses amid speculation that Europe’s financial rescue fund will receive a banking license to help solve the region’s debt crisis.
West Texas Intermediate futures advanced as much as 0.8 percent, recouping an earlier decline of 0.8 percent. The euro snapped five days of declines against the dollar, boosting the appeal of commodities. Oil also increased before an Energy Department report today that may show U.S. crude supplies shrank 1 million barrels.
A license from the European Central Bank for the rescue fund “could boost risk appetite in the short term,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, who estimates Brent crude futures should slide toward $100, based on physical supply and demand. “But the price would be huge in the long-term: high inflation and eroding confidence.”
Crude for September delivery rose as much as 66 cents to $89.16 a barrel in electronic trading on the New York Mercantile Exchange, and was at $89.13 at 1:49 p.m. London time. Prices are down 10 percent this year.
Brent crude for September settlement on the London-based ICE Futures Europe exchange gained as much as 44 cents, or 0.4 percent, to $103.86 a barrel. The European benchmark was at a $14.70 premium to the New York-traded West Texas Intermediate grade, from $14.92 yesterday.