Oil Fluctuates After Biggest Gain in Two Weeks Before ECB Meets
Oil traded little changed in New York after the biggest gain in almost two weeks before the European Central Bank meets to discuss steps to contain the region’s debt crisis and after U.S. stockpiles shrank.
Futures fluctuated after climbing for the first time in three days yesterday as government data showed crude inventories slid the most since December. The ECB will announce a policy decision today. The U.S. Federal Reserve yesterday pledged additional support for the U.S. economy if necessary. Enbridge Inc. (ENB) was waiting for approval to resume a pipeline that carries Canadian crude to the U.S. Midwest.
“Risk markets are going to be very focused on the outcome of the ECB meeting,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The Fed did what was expected and that was make a statement which had a clear bias toward further easing of monetary policy should it be required.”
Oil for September delivery was at $88.79 a barrel, down 12 cents, in electronic trading on the New York Mercantile Exchange at 3:05 p.m. Singapore time. The contract yesterday rose 85 cents to $88.91, the biggest gain since July 19. Prices are 10 percent lower this year.
Brent crude for September settlement was at $106.19, up 23 cents, on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $17.35, up from $17.05 yesterday, the widest since May.
Oil’s rebound yesterday may be unsustainable as New York futures’ 30-day stochastic oscillators remain above 70, signaling prices are overbought, according to data compiled by Bloomberg. Crude has technical support along the middle Bollinger Band, around $86.12 a barrel today. Buy orders tend to be clustered close to chart-support levels.
U.S. crude inventories shrank 6.5 million barrels last week, the biggest drop in more than seven months, data from the Energy Department showed. They were forecast to drop by 1 million barrels, according to a Bloomberg News survey.
U.S. gasoline supplies dropped 2.2 million barrels last week, the Energy Department report showed. They were forecast to rise 800,000 barrels, according to the median estimate of 12 analysts in the Bloomberg News survey.
Enbridge finished repairs on Line 14, which can carry 317,600 barrels a day of Canadian crude to Midwest refiners, and has submitted a startup plan to federal pipeline regulators, the company said in a statement on its website.
The Calgary-based company, which shut the pipe after an estimated 1,200 barrels of oil leaked in Wisconsin July 27, must receive approval for the plan from the U.S. Pipeline and Hazardous Materials Safety Administration before it can resume operations. Enbridge must meet 11 other requirements, including operating the line at reduced pressure, after startup.
The ECB will announce a policy decision today following President Mario Draghi’s pledge last week to do “whatever it takes” to keep the euro together. The Fed yesterday said it would take new policy steps as needed to promote stronger economic growth and employment, even as it refrained from a third round of asset purchases, or quantitative easing.
London is overtaking New York as the global hub for trading oil futures as more Brent contracts changed hands in June than at any time on record, data from ICE show. It was the first full quarter and third month in which Brent trading surpassed WTI on the Nymex.
The average daily volume for Brent rose 17 percent in June to a record 716,752 contracts. Trading in WTI climbed 6 percent to 599,674 lots.
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