Oct. 27 (Bloomberg) -- Oil advanced in New York after European leaders agreed on measures to tame a sovereign debt crisis that threatens to slow economic growth and curb demand for commodities.
Futures climbed as much as 3.3 percent after falling 3.2 percent yesterday, the biggest decline this month. Officials in Europe persuaded bondholders to take 50 percent losses on Greek debt and boosted a bailout fund to 1 trillion euros ($1.4 trillion). The Commerce Department said today the U.S. economy grew at the fastest pace this year in the third quarter. U.S. supplies of fuels such as gasoline, diesel and heating oil fell last week, the Energy Department said yesterday.
“The countries at least showed the will to find a solution to the debt crisis, and the participation of the banking sector in a debt cut is certainly good news for the market,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “The gains in oil are quite limited compared to equities, though, suggesting traders are hesitant to believe that European efforts will bring up oil again.”
Crude for December delivery rose as much as $2.99 to $93.19 a barrel in electronic trading on the New York Mercantile Exchange. It was at $92.92 at 1:36 p.m. London time. Yesterday, the contract declined the most since Sept. 30, losing $2.97 to $90.20. Prices have gained 1.7 percent this year.
Brent oil for December settlement on the London-based ICE Futures Europe exchange climbed as much as $2.29, or 2.1 percent, to $111.20 a barrel. The European benchmark contract was at a premium of $17.96 to New York crude, down from a record close of $27.88 on Oct. 14.
Europe’s debt-relief accord followed talks with bank representatives as officials sought to quarantine Greece and prevent speculation against France and Italy threatening another crisis. French President Nicolas Sarkozy said the bailout fund will be leveraged by four to five times. He plans to call Chinese President Hu Jintao today to discuss contributions to the fund, a person familiar with the matter said.
The Euro Stoxx 50 Index surged as much as 5.7 percent to 2,468.52, the highest since Aug. 5. The index has rallied 28 percent from this year’s low on Sept. 23 amid speculation policy makers will agree on a solution to the region’s debt woes.
The U.S. economy grew at an annual rate of 2.5 percent last quarter, the Commerce Department said today. That matched the median estimate of 68 economists surveyed by Bloomberg News. The country has the world’s largest economy and is the biggest oil consumer.
Gasoline stockpiles dropped 1.35 million barrels last week, the Energy Department said yesterday. Distillate-fuel supplies, including heating oil and diesel, fell 4.28 million barrels. Refinery utilization rose 1.7 percentage points to 84.8 percent of capacity after falling in the prior four weeks.
U.S. crude inventories rose 4.74 million barrels last week, more than three times as much as forecast in a Bloomberg survey, prompting yesterday’s price drop. Stockpiles rebounded from a 20-month low as imports climbed 18 percent, the biggest gain since September 2008.
Oil prices may reach a “pain point” $130 to $140 a barrel as a third round of quantitative easing weakens the U.S. dollar, Bank of America Corp.’s top commodity analyst said. WTI crude prices will catch up with Brent and the spread will drop to $10-$12, Francisco Blanch, head of commodities research at BofA Merrill Lynch, said in London.
Hurricane Rina weakened as it approached Mexico’s Yucatan Peninsula. Kinetic Analysis Corp., which assesses the potential impact of hazards, estimated on Oct. 25 that the storm may shut 6.27 million barrels a day of oil pumped by Petroleos Mexicanos, Latin America’s largest oil producer. Pemex, as the state-owned company is known, said port and offshore operations are normal, according to an e-mail.
Crude in New York has technical support along the 100-day moving average at $89.76 a barrel, close to where prices stopped falling yesterday, according to data compiled by Bloomberg. Futures have resistance along the 200-day moving average at $94.75 today. That’s near where futures halted their advance on Oct. 25 after reaching a 12-week high.
--With assistance from Yee Kai Pin in Singapore and Grant Smith in London. Editors: John Buckley, Raj Rajendran
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