Oil rose for a second day in New York as European Central Bank President Mario Draghi said policy makers agreed to an unlimited bond-purchase program.
Futures pared earlier gains of as much as 1.3 percent after Draghi said the bloc’s economy will contract by 0.4 percent this year, compared with a previous forecast of a 0.1 percent decline. Energy Department data may show that U.S. crude supplies fell for the first time in six weeks.
“We’ll have to have these quantitative easing measures. From a fundamental point of view, the market is still a bit oversupplied and needs rising demand to rebalance,” said Andy Sommer, a senior trader at Axpo AG in Baden, Switzerland, who predicts Brent will end the year at $112 a barrel.
Crude for October delivery climbed as much as $1.26 to $96.62 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.82 at 1:56 p.m. London time. Futures have lost 3 percent this year.
Brent oil for October settlement on the ICE Futures Europe exchange in London advanced as much as $1.27, or 1.1 percent, to $114.36 a barrel. The European benchmark crude was at a premium of $17.52 to New York-traded West Texas Intermediate grade, compared with $17.72 yesterday.
The ECB needs to be in a position to ensure the transmission of its rates in all euro-area countries, Draghi said after the ECB held its benchmark rate at a record low of 0.75 percent.
“We will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability,” Draghi said at a press conference in Frankfurt today.
Crude inventories dropped 7.2 million barrels last week to 359.3 million, the lowest since the period ended March 23, the API data show. U.S. gasoline stockpiles dropped 2.3 million barrels last week, according to the API. Supplies are forecast to fall 3 million barrels in the Energy Department report, according to the median estimate of 12 analysts surveyed by Bloomberg News.
Distillate inventories, a category that includes heating oil and diesel, declined 132,000 barrels, the API said. A median 1.55 million-barrel decrease is projected in the Energy Department report, the survey showed.
The Energy Department data are scheduled for release at 11 a.m. Washington time.
About 680,749 barrels a day of oil, or 49 percent of production, were curtailed in the Gulf of Mexico as of 12:30 p.m. East Coast time yesterday, down from 710,866 barrels, the Bureau of Safety and Environmental Enforcement said on its website. About 26 percent of natural-gas output was shut in.
U.S. Federal Reserve Chairman Ben S. Bernanke said in Jackson Hole, Wyoming, last week he wouldn’t rule out more stimulus to revive growth. Payrolls increased at a slower pace in August and unemployment exceeded 8 percent for a 43rd month, according to economist forecasts before a Labor Department report tomorrow.