Crude Oil Rises From One-Week Low Before European Debt Summit
December 08, 2011, 11:03 AM ESTBy Lananh Nguyen
Dec. 8 (Bloomberg) -- Oil rose from the lowest in almost a week in New York on speculation the European Central Bank will announce measures to boost the region’s economy and as leaders meet to tackle the sovereign debt crisis.
Futures gained as much as 0.6 percent as investors bet that the ECB may cut rates to stimulate bank lending when it meets in Frankfurt, while the region’s leaders convene in Brussels to lay the foundations for a fiscal union. A recession would curb demand for raw materials. Saudi Arabia is in no rush to agree a new OPEC production limit at the group’s Dec. 14 meeting, Oil Minister Ali al-Naimi said.
“Investors are positioning for a positive outcome from European leaders,” Torbjoern Kjus, an oil-market analyst at DnB NOR ASA, said by phone from Oslo. Crude is being boosted by “increased risk appetite” on expectations of an ECB rate cut, he said.
Crude for January delivery climbed as much as 60 cents to $101.09 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.73 at 11:38 a.m. London time. Yesterday, the contract fell 0.8 percent to $100.49, the lowest settlement since Dec. 1. Futures are up 10 percent this year after advancing 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange gained 0.6 percent to $110.16 a barrel. The European benchmark contract was at premium of $9.42 to New York-traded West Texas Intermediate grade. The spread was a record $27.88 on Oct. 14.
European Meetings
ECB policy makers meeting in Frankfurt will cut the benchmark interest rate by a quarter percentage point to 1 percent, according to 53 of 58 economists in a Bloomberg News survey. Europe’s leaders will convene in Brussels for talks to frame the fifth “comprehensive” solution in 19 months to a debt crisis that threatens the AAA ratings that Standard & Poor’s has given Germany and France. The ECB announces its rate decision at 1:45 p.m. in Frankfurt.
“There seems to be some tentative optimism that some form of solution to the euro zone crisis will be proposed and, accordingly, we’re seeing improved European demand expectations,” said Myrto Sokou, an analyst at Sucden Financial Ltd. in London. “Expectations of an ECB rate cut of 25 to 50 basis points are underpinning the gains,” she said.
Saudi Production
Saudi Arabia, the world’s biggest crude exporter, will produce “whatever the customers want,” after pumping 10 million barrels of oil a day last month, al-Naimi said in an interview in Durban, South Africa today. It will meet with other members of the Organization of Petroleum Exporting Countries next week in Vienna to discuss output targets.
The kingdom seeks to have a spare oil production capacity of 1.5 million to 2 million barrels a day, al-Naimi said. Saudi Prince Turki bin Faisal bin Abdulaziz al-Saud, former envoy to the U.S. and a member of the Saudi royal family, estimated the nation’s surplus output at 2.5 million barrels a day in October.
U.S. crude stockpiles climbed 1.34 million barrels last week, according to an Energy Department report yesterday. Analysts had forecast a decline of 1.25 million barrels.
Gasoline inventories climbed 5.15 million barrels to 215 million, almost six times the median gain projected by analysts in a Bloomberg News survey. Distillate-fuel supplies, including heating oil and diesel, added 2.53 million barrels to 141 million, the report shows. Refineries produced 5.03 million barrels a day of distillates, the fastest rate in records going back to August 1982.
--With assistance from Ayesha Daya in Durban, South Africa. Editors: Rachel Graham, Raj Rajendran
To contact the reporters on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
