Bloomberg News

Oil Rises to Three-Month High After Greece Cancels Referendum

November 07, 2011

Nov. 4 (Bloomberg) -- Oil rose its highest in three months in New York as signs that Europe will reach an agreement with Greece on a rescue plan reduced concern economic growth will falter and damp fuel demand.

Futures rose as much as 0.9 percent and are poised for a fifth weekly gain, the longest rising streak since April 2009. Greece won’t hold a public vote on a bailout package, Finance Minister Evangelos Venizelos told lawmakers in Athens yesterday. Prices were little changed by the drop in the U.S. unemployment rate to 9 percent, shown in data from the Labor Department today.

“The euro zone is the risk factor for the oil price,” said Sintje Boie, an analyst at HSH Nordbank in Hamburg, who predicts the price of Brent crude will slide to $105 by year- end. “The uncertainty is high but we don’t expect it will end in a catastrophe. Oil demand is not so bad in the U.S., and growth in Asia is strong.”

Crude for December delivery rose as much as 86 cents to $94.93 a barrel, the highest price since August 2, in electronic trading on the New York Mercantile Exchange. The contract was at $94.54 at 12:37 p.m. London time. Futures are up 1.2 percent this week and 3.7 percent in 2011.

Brent oil for December settlement on the London-based ICE Futures Europe exchange was up 54 cents at $111.37 a barrel. The premium of Brent to New York crude was at $17.04, down from a record-high settlement of $27.88 on Oct. 14.

Europe Demand

The 80,000 increase in payrolls was less than forecast and followed gains in the prior two months that were revised up by 102,000, Labor Department figures showed today in Washington. The unemployment rate fell to a six-month low of 9 percent from 9.1 percent even as the labor force expanded.

The European Union accounted for 16 percent of world oil demand in 2010, according to BP Plc’s annual Statistical Review of World Energy. The U.S. is the world’s biggest oil consumer, using 19.1 million barrels a day, or 21 percent of global consumption.

“As we get some probability the Europe situation is being contained then people are willing to put risk back on,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “With the prospect of a low-growth economic environment and a still tight supply situation, that still puts a bit of a base under oil.”

Oil in New York may be poised to drop as the market’s five- day stochastic oscillators remain above 70, an indication prices may have advanced too quickly, according to Bloomberg data. Investors tend to sell contracts when they are considered “overbought.”

Crude may fall next week on forecasts of an economic slowdown in Europe that may crimp fuel demand, according to a Bloomberg News survey. Nineteen of 31 analysts and traders, or 61 percent, forecast futures will decline through Nov. 11. Ten, or 32 percent, predicted a gain, and two said there will be little change. Last week, 48 percent of those polled projected a price drop.

--With assistance from Yee Kai Pin and Christian Schmollinger in Singapore. Editors: John Buckley, Rachel Graham

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus