Oil rose after a two-day slide as optimism that European finance ministers will make progress in taming the region’s debt crisis offset signs that crude supplies are excessive amid a global economic slowdown.
West Texas Intermediate crude gained as much as 1.5 percent after the European ministers welcomed Greece’s determination to cut spending and reshape its recession-wracked economy. The commitment improves chances that regional aid will keep flowing and stop Greece from abandoning the euro. U.S. oil supplies probably rose after crude production climbed to the highest level in more than 15 years and imports increased, a Bloomberg survey showed before an Energy Department report on Oct. 11.
“The continuing tension between bullish and bearish factors will keep oil trading in a range in the very short-term,” meaning for this month, said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who predicts Brent crude will slip to about $110 a barrel.
Crude for November delivery climbed as much as $1.32 to $90.65 in electronic trading on the New York Mercantile Exchange and was at $90.50 at 1:36 p.m. London time. The contract dropped to $89.33 yesterday, the lowest close since Oct. 3. Prices are down 8.4 percent this year.
Brent oil for November settlement gained $1.43, or 1.3 percent, to $113.25 a barrel on the London-based ICE Futures Europe exchange. Prices are up 5.5 percent this year.
Saudi Arabian Oil Minister Ali al-Naimi said the price for Brent is “still high” and that his country, the world’s biggest oil exporter, wants to see the grade fall closer to $100 a barrel.
“We will work towards moderating the price,” al-Naimi told reporters in Riyadh today ahead of a meeting of oil ministers from Gulf Arab nations. “We will meet the market demands fully.”
Brent’s premium to WTI rose to $22.75 a barrel, according to Bloomberg calculations of exchange data. That’s up from $22.49 yesterday, which was the widest close since Oct. 20 last year.
“Geopolitical risks, manifested most recently in skirmishes between Turkey and Syria, are supporting the European benchmark to a greater extent than its U.S. counterpart,” David Wech, managing director at Vienna-based analysts JBC Energy GmbH, said in a report today.
Turkey deployed additional tanks and missile defense systems on the Syrian border yesterday as artillery units responded to fire from Syrian President Bashar al-Assad’s armed forces. Tensions between the two countries have risen with the 19-month rebellion against Assad’s government, and Turkey voicing support for the rebels.
Global oil markets are “sufficiently supplied,” Maria van der Hoeven, the executive director of the International Energy Agency, told reporters today in London. At the same event, the IEA’s chief economist said oil prices are too expensive and detrimental to the world economy.
“Current prices are far too high for the global economic recovery,” Fatih Birol said in an interview in London where the agency presented a new study on Iraq’s energy potential.
Iraq is set to more than double oil production to 6.1 million barrels a day by 2020, providing almost half of the increase in global supplies this decade, the IEA said in the report. Iraq will make the biggest contribution to global oil supply growth over the next two decades and will overtake Russia by 2030 as the world’s second-largest exporter, the IEA said today in a report.
Merkel in Greece
Creditors muffled doubts about Greece’s fiscal health hours before German Chancellor Angela Merkel, the dominant figure in Europe’s bailout politics, arrived in Athens for talks with Prime Minister Antonis Samaras.
“I’m impressed by the performance of the Greek government, by the willingness of the coalition parties in Greece to undertake whatever will have to be undertaken in order to respond to our wishes,” Luxembourg Prime Minister Jean-Claude Juncker told reporters late yesterday after chairing a meeting of euro finance chiefs.
U.S. crude stockpiles probably rose 1.5 million barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg News before the Energy Department report. That would be the first gain in three weeks.
Gasoline supplies and distillate inventories, a category that includes heating oil and diesel, probably each increased by 500,000 barrels, according to the survey. Gasoline retail prices in California rose to a record, according to data released today by AAA.
The American Petroleum Institute will release separate stockpile data tomorrow. The API collects inventory information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.