Oct. 20 (Bloomberg) -- Oil rebounded on speculation that European Union leaders will reach agreement on enhancing their rescue fund and help fight the region’s debt crisis.
Futures rose as much as 1.2 percent in London as details on the EU measures emerged. The new fund may be authorized to provide credit lines amounting to as much as 10 percent of a country’s economy, a draft document obtained by Bloomberg News showed. Prices dipped briefly on reports that deposed Libyan leader Muammar Qaddafi was arrested by rebel forces.
“If the EU manages to draw up the lines of a support package large enough to rebuild the trust of the market we expect oil prices to move up,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo, who expects Brent to average $110 a barrel this quarter.
Brent oil for December settlement rose as much as $1.25 to $109.64 a barrel and was at $109.29 at 1:03 p.m. on the ICE Futures Europe exchange in London. It earlier fell as much as 0.7 percent to $107.65 a barrel as divisions emerged between France and Germany on the bail-out strategy.
On the New York Mercantile Exchange, West Texas Intermediate crude for December delivery, the most-actively traded contract, gained 40 cents to $86.51 a barrel. Yesterday it fell $2.24 to $86.29, the lowest settlement since Oct. 13. November futures, which expire today, were at $86.51.
Brent’s premium to WTI narrowed to $22.52 a barrel, having reached a record of $28.08 on Oct. 14. That spread may narrow to no less than $12 a barrel to the end of 2013 and possibly through 2015 because of supply constraints, Bank of America Corp. said in a report dated yesterday.
Libyan fighters hoisted national flags as they claimed control of Muammar Qaddafi’s hometown of Sirte amid reports that the deposed dictator had been captured and was injured.
U.S. fuel use fell 2.2 percent to 18.3 million barrels a day last week, the least since May, the Energy Department said yesterday in its weekly report. U.S. crude stockpiles dropped 4.73 million barrels to 332.9 million, according to the department. They were forecast to rise 2 million, according to the median of 13 analyst estimates in a Bloomberg News survey.
Gasoline inventories declined 3.32 million to 206.3 million. They were forecast to slide 1.5 million, according to the survey. Supplies of distillate fuel, a category that includes oil and diesel, decreased 4.27 million barrels compared with an estimate for a 1.5 million decline.
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