Oil advanced in New York, rebounding from the biggest drop this month, after European leaders agreed on measures to tame a sovereign debt crisis that threatens to slow economic growth and curb demand for commodities.
Futures climbed as much as 2.3 per cent after falling 3.2 per cent yesterday. Officials in Europe persuaded bondholders to take 50 per cent losses on Greek debt and boosted a bailout fund to €1 trillion ($1.4 trillion).
A Commerce Department report today may show the US economy expanded at the fastest pace this year in the third quarter. US fuel stockpiles fell for a fourth week, Energy Department data showed yesterday.
"The risks have shifted to the upside somewhat," said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific in Sydney. "It appears the picture we had of the global economy moving back into recession was overdone."
Crude for December delivery rose as much as $2.10 to $92.30 a barrel in electronic trading on the New York Mercantile Exchange. Yesterday, the contract fell the most since September 30, losing $2.97 to $90.20. Prices have gained 1 per cent this year.
Brent oil for December settlement on the London-based ICE Futures Europe exchange climbed as much as $1.74, or 1.6 per cent, to $110.65 a barrel. The European benchmark contract was at a premium of $18.35 to New York crude, from a record close of $27.88 on October 14.
Debt relief
Europe’s debt-relief accord followed talks with bank representatives as officials sought to quarantine Greece and prevent speculation against France and Italy. French President Nicolas Sarkozy said the bailout fund will be leveraged by four to five times. He plans to call Chinese President Hu Jintao today to discuss contributions to the fund, a person familiar with the matter said.
The US economy probably grew at an annual rate of 2.5 per cent last quarter, according to the median estimate of 68 economists surveyed by Bloomberg News before today's report. The country has the world’s largest economy and is the biggest oil consumer.
Petrol stockpiles dropped 1.35 million barrels last week and distillate-fuel supplies, including heating oil and diesel, fell 4.28 million barrels, the Energy Department report yesterday showed. Refinery use increased 1.7 percentage points to 84.8 per cent of capacity after falling in the past four weeks.
Tight supplies
US crude inventories rose 4.74 million barrels last week, more than three times as much as forecast in a Bloomberg survey, prompting yesterday’s price drop. Stockpiles rebounded from a 20-month low as imports climbed 18 per cent, the biggest gain since September 2008.
Global oil supply is "extraordinarily tight", creating the risk that prices will exceed forecasts, according to Goldman Sachs.
Restrictions on output growth in Libya and Iraq, two of the main sources of additional production, will strain the availability of oil next year, Jeff Currie, Goldman’s head of commodities research, said yesterday in London. Brent futures may surpass the bank’s 2012 average estimate of $120 a barrel, he said.
Hurricane Rina
Oil also rose as Hurricane Rina was forecast to strengthen as it approaches Mexico’s Yucatan Peninsula. Kinetic Analysis, which assesses the potential impact of hazards, estimated on Tuesday that the storm may shut 6.27 million barrels a day of oil pumped by Petroleos Mexicanos, Latin America’s largest oil producer. Pemex, as the state-owned company is known, said port and offshore operations were normal.
Crude in New York has technical support along the 100-day moving average at $89.76 a barrel, close to where prices stopped falling yesterday, according to data compiled by Bloomberg. Futures have resistance along the 200-day moving average at $94.75 today. That’s near where futures halted their advance on Tuesday after reaching a 12-week high.