Oil rose in New York for the first time in three days as President Barack Obama will cut short his vacation for talks to avert spending cuts and tax increases that threaten the economy of the world’s biggest crude consumer.
West Texas Intermediate gained as much as 0.7 percent before Democrats and Republicans convene tomorrow for talks aimed at avoiding more than $600 billion in automatic measures known as the fiscal cliff, which are scheduled to take effect Jan. 1. Crude stockpiles in the U.S. probably fell last week to the lowest in 10 weeks as imports decreased, a Bloomberg News survey showed. The volume for all WTI contracts was down 87 percent on the 100-day average.
“It is good news that President Obama is cutting his holidays to negotiate a solution to the fiscal cliff,” Ehsan Ul-Haq, a senior market consultant at KBC Energy Economics in Walton-on-Thames, England, said by e-mail. “Thin volumes don’t represent the overall market sentiment.”
WTI for February delivery climbed as much as 60 cents to $89.21 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.14 at 12:52 p.m. in London. Futures slid 5 cents to $88.61 on Dec. 24. There was no floor or electronic trading yesterday because of the Christmas holiday. Prices have lost 9.8 percent this year.
Brent for February settlement on the London-based ICE Futures Europe exchange gained 80 cents, or 0.7 percent, to $109.60 a barrel. The number of contracts trading was 83 percent lower than the 100-day average. The European benchmark crude was at a premium of $20.46 to WTI after closing at $20.29 on Dec. 24. Brent is up 2.1 percent this year.
President Obama plans to leave his Hawaii vacation and return to Washington for the budget talks tomorrow, according to a White House aide who asked not to be identified. Congress will return the same day.
A failure to reach an agreement on the budget plan would push the U.S. into recession for the first half of 2013, the nonpartisan Congressional Budget Office has said.
U.S. crude inventories fell 1.7 million barrels, or 0.5 percent, in the week ended Dec. 21 to 370 million, the lowest since Oct. 12, according to the median estimate of nine analysts surveyed before an Energy Department report this week.
The Energy Department is scheduled to release its weekly report at 11 a.m. on Dec. 28 in Washington, two days later than usual due to the Christmas holiday. The industry-funded American Petroleum Institute will publish separate data on inventories tomorrow.
WTI has fallen in 2012 as the U.S. shale boom deepened the glut at Cushing, Oklahoma, America’s largest storage hub and the delivery point for New York futures. That has left it at an average discount of $17.45 a barrel to Brent this year, compared with a premium of about 7 cents in the five years through 2010.
Iranian Foreign Ministry spokesman Ramin Mehmanparast said the six-nation Gulf Cooperation Council is risking a regional crisis because of “irresponsible” criticism and its heightened military focus, according to a report published by the state-run Mehr news agency today.
The GCC will coordinate air, land, and marine forces under one structure, Bahrain’s Foreign Minister Sheikh Khalid Bin Ahmed Al-Khalifa said this week. Sheikh Khalid also called Iran’s nuclear program a “very serious” threat.
The GCC, which includes the U.A.E., Saudi Arabia, Kuwait, Oman, Bahrain and Qatar, has accused Shiite-led Iran of intervening in the internal affairs Arab countries in the Persian Gulf, home to three fifths of the world’s oil reserves.