Bloomberg News

Oil Advances in New York as European Equities Ease Debt Fears

September 20, 2011

Sept. 20 (Bloomberg) -- Crude oil rose for the first time in three days in New York as the euro pared losses against the dollar and European equity markets advanced, easing concern that the region’s debt crisis is damping demand for fuel.

Futures gained as much as 1.1 percent, halting a slide of more than 4 percent in the previous two trading days, as the Stoxx Europe 600 index advanced 1 percent. Oil earlier fell as much as 0.7 percent following a downgrade in Italy’s credit rating by Standard & Poor’s.

“We’re seeing a slight recovery after yesterday’s drop,” said Roland Stenzel, an oil trader at E&T Energie Handelsgesellschaft mbH, by phone from Vienna. “The recovery in equities is supportive for today.”

Oil for October delivery on the New York Mercantile Exchange gained as much as 92 cents to $86.62 a barrel and was at $86.50 a barrel at 9:54 a.m. London time. The contract fell 2.6 percent yesterday and will expire today. The more actively traded November future was up 65 cents at $86.46 a barrel.

Brent crude for November settlement was up 79 cents at $109.93 a barrel on the ICE Futures Europe exchange in London. The contract yesterday fell 2.7 percent to $109.14 a barrel. The European benchmark future was at a premium of $23.60 to the November price of West Texas Intermediate, compared with a record settlement of $26.87 on Sept. 6.

Ideal Price

Members of the Organization of Petroleum Exporting Countries no longer see $75 a barrel as an ideal price, and the group will discuss altering output levels in December should Libyan production recover, OPEC Secretary-General Abdalla El- Badri told reporters in Dubai today.

El-Badri told Bloomberg Television yesterday that oil prices are unlikely to rise from current levels by year end.

Saudi Arabia, the world’s largest oil exporter, cut exports and increased inventories in July, a sign that demand worldwide may be slowing. The kingdom pumped 9.6 million barrels a day, down 2 percent from June, the Joint Organization Data Initiative reported Sept. 18. The output was lower than earlier estimates by the Organization of Petroleum Exporting Countries and the International Energy Agency.

The nation had 239.8 million barrels of oil in storage within its territory in July, compared with 236.5 million barrels in June, according to JODI’s website. The association is supervised by the Riyadh-based International Energy Forum and compiles data supplied by member governments.

European Situation

“The main driver of financial and commodity markets is the European situation,” said Ken Hasegawa, a commodity-derivatives sales manager at Newedge Group in Tokyo, who expects oil to trade between $83 to $90 a barrel in the short term.

Greece will talk today with its main creditors after a “productive” round of discussions in a teleconference with International Monetary Fund and European Union officials yesterday aimed at staving off default, the Athens-based finance ministry said in an e-mailed statement.

The Stoxx Europe 600 index gained as much as 1 percent. The euro traded at $1.3674 at 10:08 a.m. London time, after falling as low as $1.3594. The European Union and the U.S. accounted for 38 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy.

Technical Support

Oil in New York is no longer in the upward-sloping trend that was in place for the past six weeks, according to data compiled by Bloomberg. The bottom of the so-called channel for crude is about $87.42 a barrel today. Investors tend to sell contracts when prices breach technical-support levels.

“We could see the commencement of a move that can see crude back down at $80 a barrel, if not lower,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “That upward trend channel was tested and finally broke.”

U.S. crude oil supplies probably declined to an eight-month low last week as refineries cut deliveries with the start of a maintenance cycle, a Bloomberg News survey showed. Stockpiles fell 1.5 million barrels, or 0.4 percent, to 344.9 million in the seven days ended Sept. 16, according to the median of nine analyst estimates before a weekly Energy Department report tomorrow. The industry-finance American Petroleum Institute publishes its inventory figures today.

--With assistance from Ayesha Daya in Dubai. Editors: John Buckley, Raj Rajendran

To contact the editor responsible for this story: John Buckley at

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