Sept. 26 (Bloomberg) -- Oil rose from its lowest in almost seven weeks in New York on speculation that renewed measures by the European Central Bank may alleviate the region’s sovereign debt crisis, supporting economic growth and fuel demand.
Futures reversed losses of as much as 3.4 percent after a euro-region central bank official, who declined to be identified, said policy makers are likely to debate the resumption of covered-bond purchases next week. Saudi Arabia, the world’s largest crude exporter, may cut production to prevent prices falling below $90 a barrel in London, according to HSBC Holdings Plc.
“If the world economy manages to generate some growth, albeit it at a slower pace, we would expect oil prices to remain well supported above $90 to $100” for Brent crude, said Amrita Sen, a commodities analyst at Barclays Plc in London.
Crude for November delivery on the New York Mercantile Exchange advanced as much as $1, or 1.3 percent, to $80.85 a barrel. Earlier it fell $2.74 to $77.11 a barrel, the lowest price since Aug. 9, and was at $80.03 at 12:54 p.m. London time. Oil is down 12 percent this year in New York.
Brent futures for November settlement gained 63 cents, or 0.6 percent, to $104.60 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $24.59 to U.S. futures, compared with a record $26.87 on Sept. 6, based on front-month settlement prices. conditions, a said.
Loans to Banks
The reintroduction of 12-month loans to banks will be discussed at the ECB’s Oct. 6 policy meeting, according to the central bank official, who spoke on condition of anonymity because the information is confidential. Interest-rate cuts are likely to be discussed, though they are not on the current agenda, the official said.
The European financial crisis and general fears about the global economy have weakened demand for crude, Qatari Oil Minister Mohammed Saleh al Sada said yesterday in Doha. Supplies are adequate and the nation is pleased that Libya is starting to produce and export oil, he said.
Harouge Oil Operations, a joint venture between Libya’s state-owned National Oil Corp. and PetroCanada, will begin pumping crude from the country’s Amal field in a “few weeks,” the company’s chairman said. Full output of 100,000 barrels a day is expected to be reached by year’s end, Abdulwahab Elnaami said yesterday at his office in the Libyan capital Tripoli.
Hedge Fund Bets
Fighting in the North African nation since February has reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell to 45,000 barrels a day last month, according to Bloomberg estimates, compared with the 1.6 million barrels a day the nation pumped in January.
Oil prices lost 7.4 percent last week in London even as hedge funds and other money managers raised bullish bets on Brent crude by 6.2 percent in the week ended Sept. 20, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 73,270 contracts, the London-based exchange said today in its weekly Commitment of Traders report. Net-long positions rose by 4,276 contracts, from 68,994 a week earlier.
--Editors: John Buckley, Rob Verdonck
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