Crude futures fluctuated in New York as the European Central Bank met to discuss the bloc’s debt crisis, while U.S. oil stockpiles shrank.
Oil was little changed, paring an earlier increase of 0.7 percent after the ECB kept its benchmark interest rate at a record low of 0.75 percent. The central bank will hold a press conference at 2:30 p.m. in Frankfurt. U.S. crude inventories slid the most since December, Energy Department data showed yesterday. Enbridge Inc. was waiting for approval to resume a pipeline that carries Canadian oil to the Midwest.
“The ECB will issue strong words, but are unlikely to announce anything substantial,” said Guy Wolf, a strategist at Marex Spectron Group Ltd., a London-based commodities broker. “The central bank meetings are inhibiting trading activity, which in any case is subdued because of the summer.”
Oil for September delivery was at $88.92 a barrel, 1 cent higher in electronic trading on the New York Mercantile Exchange at 12:59 p.m. London time. The contract rose 85 cents yesterday, the biggest gain since July 19. Prices are 10 percent lower this year.
Brent crude for September settlement was at $106.70, up 74 cents, on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate widened to $17.82, the biggest spread since May 17.
Oil’s rebound yesterday may be unsustainable as New York futures’ 30-day stochastic oscillators remain above 70, signaling prices are overbought, according to data compiled by Bloomberg. Crude has technical support along the middle Bollinger Band, at around $86.12 a barrel today. Buy orders tend to be clustered close to chart-support levels.
U.S. crude inventories shrank 6.5 million barrels last week, the biggest drop in more than seven months, data from the Energy Department showed. They were forecast to drop by 1 million barrels, according to a Bloomberg News survey.
Gasoline supplies dropped 2.2 million barrels last week, the Energy Department report showed. They were forecast to rise 800,000 barrels, according to the median estimate of 12 analysts in the Bloomberg News survey.
Enbridge finished repairs on Line 14, which can carry 317,600 barrels a day of Canadian crude to Midwest refiners, and has submitted a start plan to federal pipeline regulators, the company said in a statement on its website.
The Calgary-based company, which shut the link after an estimated 1,200 barrels of oil leaked in Wisconsin July 27, must receive approval for the plan from the U.S. Pipeline and Hazardous Materials Safety Administration before it can resume operations. Enbridge must meet 11 other requirements, including operating the line at reduced pressure, after resuming.
The ECB meeting follows President Mario Draghi’s pledge last week to do “whatever it takes” to keep the euro together. The Fed yesterday said it would take new policy steps as needed to promote stronger economic growth and employment, even as it refrained from a third round of asset purchases, or quantitative easing.
“Risk markets are going to be very focused on the outcome of the ECB meeting,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The Fed did what was expected and that was make a statement which had a clear bias toward further easing of monetary policy should it be required.”
London is overtaking New York as the global hub for trading oil futures as more Brent contracts changed hands in June than at any time on record, data from ICE show. It was the first full quarter and third month in which Brent trading surpassed WTI on the Nymex.
The average daily volume for Brent rose 17 percent in June to a record 716,752 contracts. Trading in WTI climbed 6 percent to 599,674 lots.