Oil advanced from a two-week low in New York after President Barack Obama said leaders of both parties in the US House and Senate approved a deal to raise the nation's debt ceiling, stoking optimism over the economic recovery in the world's biggest crude-consuming nation.
Futures surged as much as 1.7 per cent after Obama spoke from the White House and Senate Majority Leader Harry Reid endorsed the emerging accord between Republican leaders and the administration. The US won't default on its obligations, Senate Minority Leader Mitch McConnell said. A Labor Department report on Aug. 5 may show July payrolls rose by 90,000 workers.
"It's a sigh of relief," said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who predicts oil will average $US100 a barrel this year. "It's euphoric and oil has the potential to hit back through the top end of the range. Unemployment this week is the key."
Crude for September delivery rose as much as $US1.59 to $US97.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $US97.24 at 11:50 a.m. Sydney time. The contract slipped $US1.74 to $US95.70 on July 29, the lowest settlement since July 14. Prices gained 0.3 per cent last month and are 20 per cent higher the past year.
Brent oil for September settlement climbed $US1.44, or 1.2 per cent, to $US118.18 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $US20.99 to New York futures, compared with a record close of $US22.63 on July 14.
Debt Deal
Congressional leaders are sifting through the details of the tentative bipartisan agreement to raise the debt ceiling, preparing to sell the deal to skeptical Republicans and Democrats ahead of possible votes today.
The framework would raise the $US14.3 trillion debt ceiling through 2012, cut spending by about $US1 trillion and call for enactment of a law shaving another $US1.5 trillion from long-term debt by 2021 -- or institute punishing reductions across all government areas, including Medicare and defense programs, according to congressional officials.
Oil also rose as hedge funds increased bullish bets on gasoline for a fifth consecutive week, pushing futures to the highest since May. Large speculators increased wagers on rising prices by 1.9 per cent in the week ended July 26 as US imports declined and falling refinery output crimped supply, according to the Commodity Futures Trading Commission's weekly Commitments of Traders report. It was the highest total since April 11.
Higher Output
Oil and gas companies in the Gulf of Mexico are restoring production after Tropical Storm Don dissipated over Texas, the Bureau of Ocean Energy Management, Regulation and Enforcement said yesterday. About 6 per cent of oil output and 3.5 per cent of gas pumping in the Gulf was shut in as of 11:30 a.m. Central time, down from 11.9 per cent and 6.2 per cent respectively at the height of the storm, according to the bureau.
Tropical Storm Eugene, the fifth named storm of the Eastern Pacific hurricane season, formed over the ocean about 410 miles (659 kilometers) south of Acapulco, Mexico, the US National Hurricane Center said.
The Organization of Petroleum Exporting Countries' crude output rose in July to the highest level since December 2008, led by gains in Saudi Arabia and Angola, according to a Bloomberg News survey.
Production increased 245,000 barrels, or 0.8 per cent, to average 29.565 million barrels a day, according to the survey of oil companies, producers and analysts. Daily output by the 11 members with quotas, all except Iraq, climbed 230,000 barrels to 26.845 million, 2 million barrels above their target.