Oil Rises First Time in Three Days on German Confidence
Oil rose for the first time in three days in New York, erasing this week’s decline, after German business confidence unexpectedly increased.
Futures gained as much as 1.1 percent after the Munich- based Ifo institute said today its business climate index, based on a survey of 7,000 executives, rose to 109.9 from 109.8 in March. Economists forecast a drop to 109.5, according to the median of 40 economists in a Bloomberg News survey. Oil may resume its decline next week on speculation that the U.S. economic recovery will slow, reducing demand for crude, and tension with Iran will ease, a Bloomberg survey showed.
“Commodity markets are watching developments in Europe,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Oil is rebounding off of last night’s lows, benefiting a bit from the German confidence index. Prices are likely to consolidate around current levels in macro-dominated trading.”
Crude for May delivery rose as much as $1.12 to $103.39 a barrel in electronic trading on the New York Mercantile Exchange and was at $103.34 as of 1:39 p.m. London time. It fell to $102.27 yesterday, the lowest close since April 10. The May contract, which expires today, is up 0.5 percent this week. The more-actively traded June future rose $1.02 to $103.74 a barrel.
Brent oil for June settlement was at $118.98 a barrel, up 98 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $15.24, compared with $15.28 yesterday.
Decline May Resume
Seventeen of 30 analysts in Bloomberg’s survey forecast prices will decline through April 27 amid signs the U.S. economy may be slowing and tension with Iran over its nuclear program may ease. Seven respondents predicted they will rise and six estimated there will be little change.
Negotiators from Iran, the five permanent members of the United Nations Security Council and Germany will meet in Baghdad on May 23 to discuss the Persian Gulf nation’s alleged efforts to develop nuclear weapons, a claim it denies. The parties met in Istanbul on April 14 for the first talks in 15 months.
Iranian Oil Minister Rostam Qasemi said yesterday that he hoped for “good news” from the meeting, according to Shana, an oil ministry news website. Further European Union sanctions will affect global energy-supply security and crude prices, he said. The EU plans to put sanctions on Iran’s energy industry into effect July 1.
“People are beginning to wind back their risk premium associated with Iran,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The U.S. economy is bubbling along but it’s not really giving people the sense that the momentum will have an upward trajectory from here.”
Nymex Margin Requirement
The New York Mercantile Exchange cut the margin requirement on a series of crude spreads two days after President Barack Obama called for an increase to reduce speculative activity by traders. The new rules governing the amount of money investors must put up to back bets on Nymex’s light, sweet crude and Brent spreads will be effective at the close of business April 23, CME Group Inc., the exchange’s parent company, said yesterday.
The changes don’t apply directly to the Nymex oil futures and options contracts, the most actively traded instruments for crude on the exchange. They are specifically for commodity spreads through which a trader can take a position on two linked contracts, said Damon Leavell, a CME spokesman in New York.
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