June 20 (Bloomberg) -- Crude oil rose in New York as Luxembourg’s prime minister, Jean-Claude Juncker, assured investors a solution will be found to Greece’s debt crisis.
Futures climbed 0.3 percent after Juncker said Greek Prime Minister George Papandreou had assured him the government would do everything to ensure financial aid. He also said Italy was not in danger from the euro area’s debt crisis. Prices slid 2 percent before Juncker’s comments on concern Greece’s debt crisis would weaken the global economy and curb fuel demand.
“The market is getting some reassurance,” said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage LLC in New York. “Crude oil is near the bottom. $90 is a fair value and I don’t think there is a lot of concern to see it plunge under $90.”
Crude oil for July delivery rose 25 cents to settle at $93.26 a barrel on the New York Mercantile Exchange. The contract touched $91.14, the lowest intraday level since Feb. 22 and below $91.38, the final settlement of 2010. Futures have increased 2.1 percent so far this year.
Futures have dropped 18 percent from the 2011 settlement high of $113.93 on April 29. A 20 percent decline is typically considered to be an indicator of a bear market. The July contract expires tomorrow. August futures advanced 23 cents, or 0.3 percent, to $93.63.
Brent crude oil for August delivery fell $1.52, or 1.3 percent, to $111.69 a barrel on the London-based ICE Futures Europe exchange.
Pressure on Greece
Euro-area finance ministers pushed Greece to cut its deficit and sell state assets. They left open whether the country will get the full 12 billion euros ($17.1 billion) promised for July as part of a bailout agreed on last year, Juncker said after chairing a crisis meeting in his country.
“Market participants will be paying attention to every comment from a European finance minister or any major protest in Athens,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “These comments and events will send prices moving in either direction.”
The euro was little changed at $1.4311 as of 2:39 p.m. in New York after dropping to $1.4191. The Standard & Poor’s 500 Index rose 0.6 percent to 1,278.79 and the Dow Jones Industrial Average gained 0.6 percent to 12,080.80.
“There’s great tension in the market,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The S&P is higher today, which is a distraction from the largely negative fundamentals.”
Japan’s exports decreased 10.3 percent in May from a year earlier after April’s 12.4 percent drop, the Finance Ministry said today. The median estimate of 25 economists surveyed by Bloomberg News was for an 8.4 percent decline.
Crude also rose as the Centre for Global Energy Studies said Saudi Arabia and the three other Persian Gulf states in OPEC who pledged on June 8 to increase supplies will be “cautious” in raising output to avoid weakening prices.
CGES, a non-profit think tank founded by former Saudi Arabian Oil Minister Sheikh Ahmad Zaki Yamani, forecasts that all of the organization’s members will provide an average of 29.6 million barrels a day during the third quarter, less than the 30.9 million that OPEC projects is needed.
Kuwait’s crude output capacity is 3.2 million barrels a day and the country’s policy is not to oversupply the market, Mohammad Al-Busairy, the country’s oil minister, said in an interview on Al-Arabiya television.
The country is currently producing 2.55 million to 2.7 million barrels a day, which is “what Kuwait’s clients need,” Busairy said.
Saudi Arabia, Kuwait, the United Arab Emirates and Qatar agreed to keep consumers adequately supplied this year after talks with other members of the Organization of Petroleum Exporting Countries collapsed on June 8 without an accord.
Oil fell earlier in the day on speculation a weakening global economy will reduce energy demand.
The International Monetary Fund cut its forecast for U.S. growth in 2011, warning of setbacks to the economy and potential contagion from the debt crisis.
The U.S. will expand 2.5 percent this year, less than the 2.8 percent projected in April, the Washington-based IMF said June 17. It sees the global economy expanding 4.3 percent this year, down from 4.4 percent in April.
Hedge funds and other speculators boosted wagers on crude rising in the seven days ended June 14, the U.S. Commodity Futures Trading Commission said in its weekly Commitment of Traders report on June 17. Net-long bets climbed by 3,398 futures and options combined, or 1.8 percent, to 194,372. That was the first increase in three weeks.
Oil volume in electronic trading on the Nymex was 480,121 contracts as of 3:23 p.m. in New York. Volume totaled 690,630 contracts on June 17, 4 percent above the average of the past three months. Open interest was 1.54 million contracts.
--With assistance from Grant Smith in London and Ola Galal in Cairo. Editors: Joe Link, Dan Stets
To contact the reporter on this story: Mark Shenk in New York at firstname.lastname@example.org; Moming Zhou in New York at Mzhou29@bloomberg.net
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