Oil rose from the lowest close in almost two months in New York after a European Central Bank official signaled the lender may act to stem the spread of the region’s debt crisis.
Futures gained as much as 0.7 percent as the euro strengthened against the dollar after ECB Executive Board member Benoit Coeure suggested that the bank may restart bond purchases for Spain. Crude declined yesterday after an industry report showed U.S. stockpiles rose for a third week. The Energy Department will release its inventory report later today.
“Oil is getting some support from a weaker greenback amid some ECB reassurances,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “We also have a general rebound across the board along with equities after losses yesterday, though it seems this may be short-lived.”
Crude for May delivery advanced as much as 74 cents to $101.76 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.47 at 1:31 p.m. London time. The contract fell yesterday 1.4 percent to $101.02, the lowest settlement since Feb. 14. Prices are up 2.8 percent this year.
Brent crude for May settlement on the London-based ICE Futures Europe exchange traded at $119.64 a barrel, down 24 cents. The European benchmark contract was at a premium of $18.25 to New York futures. The spread yesterday shrank 6.7 percent, the most since Feb. 20, to $18.86.
Europe’s shared currency advanced against the dollar amid speculation that an ECB bond-purchase program may cut Spain’s borrowing costs. Prime Minister Mariano Rajoy’s three-month-old government is struggling to convince investors it can reduce the budget deficit. The euro rose as much as 0.6 percent to $1.3157, making commodities priced in dollars less expensive.
“Market conditions are not justified,” the ECB’sCoeure said at an event in Paris today. “Will the ECB intervene? We have an instrument, the securities markets program, which hasn’t been used recently but it still exists.”
U.S. crude stockpiles are forecast to climb to 364.4 million barrels in the seven days ended April 6, according to the median estimate of 10 analysts surveyed by Bloomberg News. Gasoline supplies are projected to decline by 1.38 million barrels, while the API data showed a gain of 1.18 million barrels. Inventories of distillates, a category that includes diesel and heating oil, may drop 250,000 barrels, compared with a decline of 476,000 barrels in the API report.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. Its data will be release at 10:30 a.m. Washington time.
“The fact there is a surplus in the U.S. is borne out by yesterday’s API inventory data,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, who predicts crude will average $104 a barrel this quarter.
U.S. gasoline demand declined 0.8 percent last week from the prior seven days and consumption slipped below year-earlier levels for the 32nd consecutive week, MasterCard Inc. (MA:US) said in its SpendingPulse report yesterday. Drivers bought 8.8 million barrels a day of the fuel in the seven days ended April 6, down from 8.87 million the prior week, the report showed.
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