Oil advanced for a third day in New York on signs voters in Greece may back austerity measures needed for a European Union bailout, easing concern the region’s debt crisis will worsen and derail the global economic recovery.
Futures gained as much as 1.1 percent after Greece’s New Democracy party, which supports the bailout plan agreed with international lenders, placed first in all six opinion polls. Crude has slipped 12 percent this month amid concern Europe’s crisis will curb fuel demand. Prices climbed on May 25 after the United Nations said Iran boosted its output of enriched uranium. The country faces an oil embargo starting July because of its nuclear program.
“If we were to start moving toward the Greek election with a realistic chance that the most likely outcome is a pro-bailout government, that would change the risk profile of a lot of markets,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said in a telephone interview today. “Evidence that Iran’s production of uranium has increased is a reminder that the core issue is still there.”
Crude for July delivery increased as much as $1.04 to $91.90 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.77 at 3:19 p.m. Singapore time. The contract rose 0.2 percent to $90.86 on May 25, the highest close since May 22. Prices are down 7.1 percent this year. There will be no floor trading in New York today because of the Memorial Day holiday.
Brent oil for July settlement was at $107.56 a barrel, up 0.7 percent, on the London-based ICE Futures Europe exchange. Prices are down 10 percent this month. The European benchmark contract’s premium to West Texas Intermediate was at $15.79, from $15.97 on May 25.
Iran, the second-biggest crude producer in the Organization of Petroleum Exporting Countries, faces increased Western sanctions including an oil embargo from July 1 aimed at persuading it to stop enriching uranium. The Persian Gulf nation has almost doubled its stockpile of 20 percent medium-enriched uranium since February, the UN’s International Atomic Energy Agency said in a May 25 report.
The inspectors also found “the presence of particles” of 27 percent-enriched uranium at the nation’s Fordo facility, they said. While Iran insists that its atomic work is peaceful, it has been under IAEA scrutiny since 2003 over evidence that it is trying to develop nuclear weapons.
Negotiators from the U.S., the U.K., France, Germany, China and Russia plan to meet their Iranian counterparts June 18 and June 19 in Moscow. The sides were unable to reach agreement during talks in Baghdad last week.
Hedge Fund Bets
The cost of Greece leaving the euro area would be greater than staying in the shared currency, the leader of New Democracy, Antonis Samaras, said May 26. The party led by a margin of as much as 5.7 percentage points over Syriza, which is opposed to implementing the terms of financial aid packages, a poll by Kapa Research SA for To Vima newspaper shows.
Hedge funds reduced bullish oil bets to a 20-month low as Europe’s worsening debt crisis weakened the region’s economy and currency. Money managers decreased net-long positions, or wagers that prices will rise, for a third week to 136,751 in the seven days ended May 22, according to the Commodity Futures Trading Commission’s Commitments of Traders report on May 25. It was the lowest level since September 2010.
Tropical Storm Beryl, the second named storm of the 2012 Atlantic season, made landfall along the coast of Florida near Jacksonville Beach, according to the U.S. National Hurricane Center. The weather system was about 5 miles (8 kilometers) east of Jacksonville, with maximum sustained winds of 65 miles per hour, the Miami-based center said in an advisory posted before 2 a.m. New York time.
“The onset of U.S. hurricane activity could be supportive” for oil prices, Mark Pervan, senior commodity strategist with ANZ Banking Group Ltd., said in a note. “This could remind the market of potential supply disruption risks in the Gulf Coast over the next few months.”
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