Oil pared its weekly decline in London amid speculation the European Central Bank may take further steps to address the region’s debt crisis and avert a deeper global slowdown.
Brent futures rose as much as 1.1 percent. France’s Le Monde reported that the European Central Bank is preparing to buy debt after ECB President Mario Draghi said yesterday that policy makers will do whatever is needed to preserve the euro. Crude pared gains after Germany’s Bundesbank said restarting the ECB’s bond-purchase program was not the best solution and a report showed U.S. economic growth slowed in the second quarter.
“Returning confidence in the euro zone after Draghi’s commitment to protect the euro” is buoying oil, said Myrto Sokou, an analyst at Sucden Financial Ltd. in London.
Brent crude for September settlement was up 37 cents at $105.63 a barrel at 1:50 p.m. on the ICE Futures Europe exchange in London, paring this week’s decline to 1.1 percent. The European benchmark’s premium to West Texas Intermediate was at $16.25, up from $15.87 yesterday.
WTI for September delivery on the New York Mercantile Exchange was little changed at $89.46 a barrel after rising as much as 84 cents to $90.23. The contract climbed 0.5 percent yesterday to $89.39, the highest close since July 20. Prices are 2.3 percent lower this week.
U.S. gross domestic product, the value of all goods and services produced, rose at a 1.5 percent annual rate after a revised 2 percent gain in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.4 percent increase. Household purchases, which account for about 70 percent of the world’s largest economy, grew at the slowest pace in a year.
Financial markets surged yesterday on speculation the ECB will act to lower Spanish borrowing costs after yields on the nation’s bonds rose to levels that prompted bailouts for Greece, Portugal and Ireland. The ECB started buying Spanish and Italian debt in August last year as part of its bond-purchase program. The ECB suspended the program in March.
Oil may decline next week on speculation that central banks will take insufficient steps to bolster economic growth, a Bloomberg survey showed.
Eighteen of 30 analysts and traders, or 60 percent, forecast crude will decrease through Aug. 3. Nine respondents, or 30 percent, predicted that futures will increase and three said there will be little change in prices. Last week, 44 percent of analysts projected a drop.
-- Editors: John Buckley, Rachel Graham