Oil rose, recovering earlier losses, after Federal Reserve Chairman Ben S. Bernanke said accommodative policy is needed to lower unemployment.
West Texas Intermediate futures advanced as much as 0.4 percent, having earlier declined by 0.6 percent. The dollar weakened after Bernanke’s comments, made in a speech today in Arlington, Virginia, making commodities more attractive for protecting against inflation. The decline in U.S. unemployment to 8.3 percent may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” the Fed chairman said.
“A weaker dollar is supportive to oil today,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “There’s nothing new in Bernanke’s comments as policy is already accommodative. Many people expect that, with no interest rate rises until 2014, the greenback is going to remain soft.”
Oil for May delivery climbed as much as 45 cents to $107.32 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.05 at 1:29 p.m. London time. It rose $1.52 to $106.87 on March 23, the highest close since March 21. Prices are up 8.4 percent so far this year after advancing 25 percent in the last quarter of 2011.
Brent for May settlement was at $125.29 a barrel, up 17 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $18.67.
WTI futures earlier slid as much as 0.6 percent. Spain may reignite the European debt crisis, Italy’s Prime Minister Mario Monti warned as euro-area ministers prepare a deal to strengthen the region’s financial firewall. BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), forecast profit may fall as much as 95 percent.
“The continuing European saga of poor growth and unsustainable debt remains a factor in holding prices back,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who correctly predicted Brent’s rise above $120 a barrel. “As does perhaps more modest Chinese growth and increased levels of Saudi production.”
Hedge funds and other money managers cut bullish bets on Brent crude by 621 contracts in the week ended March 20, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 139,578 lots, the London-based exchange said today in its weekly Commitment of Traders report.
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