West Texas Intermediate crude advanced to near its highest closing level in more than two weeks. OPEC’s reference price rebounded above $100 a barrel.
WTI reversed losses of 0.6 percent as European stocks and the euro rose amid speculation central banks will maintain monetary stimulus. Brent crude traded near its highest closing price in two weeks as Italian Prime Minister Enrico Letta prepared to finish installing a new government. Hedge funds curbed bullish bets on the North Sea benchmark to their lowest in four months, data from ICE Futures Europe showed.
“We do expect oil demand to pick up in the months ahead,” said Michael Poulsen, an analyst at Global Risk Management in Middlefart, Denmark. Brent “prices should be fundamentally supported around the three-digit mark,” he said.
WTI for June delivery climbed as much as 46 cents, or 0.5 percent, to $93.46 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $93.27 as of 12:46 p.m. London time. It settled at $93.64 on April 25, the highest closing level since April 10. The volume of all contracts traded was 1 percent below the 100-day average.
Brent for June settlement declined as much as 59 cents to $102.57 a barrel on the London-based ICE Futures Europe exchange, and was at $103.11. The front-month contract was at a premium of $9.77 to WTI compared with $10.16 on April 26.
Morgan Stanley is “skeptical” that the spread between WTI and Brent can fall on a sustained basis, the bank said in a report e-mailed today. Any significant narrowing would be a selling opportunity as differentials will probably widen again throughout the year, it said.
The Stoxx Europe 600 Index added 0.2 percent as of 12:50 p.m. in London, extending its biggest weekly increase in five months. The euro strengthened 0.4 percent to 1.3076 per dollar. Italy’s new leader will address Parliament at 3 p.m. local time, followed by a confidence vote in the Chamber of Deputies needed to install the government.
The basket of 12 crude grades used as a reference by the Organization of Petroleum Exporting Countries also rose above $100 for the first time since April 12. The basket was at $100.70 on April 26, according to an e-mail today from the group’s Vienna-based secretariat.
Brent at $100 a barrel “is more reasonable, looking at the fundamentals,” Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said yesterday. “Some of the geopolitical risk has come off and the economic risk is to the downside for prices.”
Net-long positions in WTI crude held by money managers, including hedge funds, commodity pools and commodity-trading advisers, dropped in the week ended April 23, according to the Commodity Futures Trading Commission’s April 26 Commitments of Traders report. They fell by 624 futures and options combined to 182,408, the CFTC report showed.
Hedge funds and other money managers cut bullish bets on Brent crude to their lowest level in four months for a third consecutive week, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 99,127 lots in the week ended April 23, ICE said in its weekly Commitment of Traders report. The drop of 8,973 contracts, or 8.3 percent leaves so-called net-longs at their lowest since Dec. 11.
WTI may extend losses as an indicator of technical momentum falters. The 50-day moving average, at $92.65 a barrel today, has dropped below the 100-day moving average for the first time in three months, according to data compiled by Bloomberg. Investors typically sell contracts on a “death cross,” when a moving average falls below a longer-term one. The 50-day average is about 84 cents above the 200-day mean, the smallest premium since February.
Angola, Africa’s second-largest oil producer, plans to cut crude exports to 51 cargoes, or 1.63 million barrels a day, in June, which is the lowest in nine months, according to a final loading program obtained by Bloomberg News.