July 19 (Bloomberg) -- Oil climbed in London for the first time in four days on speculation that European lawmakers may reach an agreement to resolve the region’s debt crisis, and on signs of shrinking crude stockpiles in the U.S.
Brent advanced as much as 1.1 percent as the euro strengthened against the dollar after Greece’s Finance Minister Evangelos Venizelos said a solution is “attainable” at a summit of European leaders to be held in two days. A weaker U.S. currency makes dollar-denominated assets such as oil more attractive. A report tomorrow may show crude inventories in the U.S. dropped for a seventh week.
“The market is focusing on the robust, medium-term fundamentals and ignoring bearish factors,” said Torbjoern Kjus, senior analyst at DnB NOR in Oslo, who correctly predicted in May that supply from the Organization of Petroleum Exporting Countries would rise. “Based on the news flow over the past two months, Brent should be lower, maybe down to $100.”
Brent oil for September settlement rose as much as $1.22 cents to $117.27 a barrel on the ICE Futures Europe exchange. It was at $117.11 at 1:37 p.m. London time. Prices have risen 55 percent in the past year.
Crude for August delivery on the New York Mercantile Exchange rose as much as $1.31, or 1.4 percent, to $97.24 a barrel after a government report showed that housing starts in the U.S. rose more than forecast in June to the fastest pace in five months. The contract was up $1.27 at $97.20 a barrel at 1:39 p.m. London time. The contract yesterday declined to $95.93, the lowest since July 14. The more actively traded September future climbed $1.26 to $97.51 a barrel.
“It’s summer drive-time, inventories are coming back a bit and people are suggesting that the economy is not going to falter,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who predicts oil in New York will average $100 a barrel this year. “The market’s not decided as to what the consequences are to oil yet” from the debt situation, he said.
Prices also rose after China said its apparent fuel consumption, which includes domestic production and net imports and excludes inventory changes, rose 7.2 percent in the first half. Crude slipped yesterday amid concern Europe’s leaders will be unable to agree on steps to ensure the region’s financial stability at a summit this week.
An Energy Department report may show U.S. crude supplies fell 1.5 million barrels for a seventh week in the seven days ended July 15, according to the median of 10 analyst estimates in a Bloomberg News survey. Gasoline inventories probably slid 100,000 barrels from 211.7 million, the survey shows.
European Union government chiefs plan to meet for the second time in a month on July 21, aiming to break a deadlock over a new Greek rescue that has spooked investors. Spanish and Italian bonds yields surged yesterday, piling pressure on officials to end the turmoil.
Oil’s climb in New York may stall along the 50-day moving average, at $97.52 a barrel today, according to data compiled by Bloomberg. Front-month futures last settled above this indicator on May 5. A breach of technical resistance usually means prices will continue to rise.
Futures have risen 6.8 percent in New York since the International Energy Agency announced a release of strategic stockpiles June 23. IEA member nations are likely to decide against offering more oil after last month’s release failed to curb prices and Middle East output rose, according to a Bloomberg News survey. The agency will say on or about July 23 whether members will continue emergency sales to make up for supply choked off by the Libyan conflict.
Oil is advancing as the first tropical storms of the Atlantic Hurricane season form.
Bret, the second such system, weakened as it moved northeast away from the Bahamas and is forecast to diminish during the next 48 hours, U.S. National Hurricane Center said. Bret was about 205 miles (330 kilometers) north of Great Abaco Island in the Bahamas, moving north-northeast at about 7 miles per hour, the center said. Sustained winds dropped to 50 mph.
In the eastern Pacific, Tropical Storm Dora strengthened and is forecast to become a hurricane today. Dora is about 300 miles south of Puerto Angel, Mexico, and moving west at 16 mph, the center said at 5 a.m. Miami time. The storm is expected to intensify in the next 48 hours.
Dora’s maximum sustained winds were near 65 miles per hour with higher gusts, while its storm-force winds extended outward as far as 125 miles, the center said. “Life-threatening” surf swells are expected to affect the coast of south Mexico today.
--With assistance from Lananh Nguyen in London and Yee Kai Pin in Singapore. Editors: John Buckley, Raj Rajendran
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