Crude rises on speculation Bernanke may signal growth plans
Crude oil rose, reversing earlier losses as US stock-index futures rose before a speech from Federal Reserve Chairman Ben Bernanke that may indicate new measures to stimulate the economy.
Crude is set to snap two weeks of decline this week and may rise further in the next seven days, a Bloomberg News survey showed.
Bernanke is scheduled to speak later at the Fed’s annual meeting in Jackson Hole, Wyoming, as investors speculated about monetary measures to bolster the recovery.
Futures on the Standard & Poor’s 500 Index expiring in September gained 0.3pc.
“Seventy dollars a barrel has proven to be a very solid floor since the end of last year,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
“It is hoped the Bernanke speech will give clues for Fed policy, notably blueprints for a second round of quantitative easing.”
Crude oil for October delivery rose 30 cents to $73.66 a barrel in electronic trading on the New York Mercantile Exchange as of 12:02pm.
It earlier declined as much as 49 cents, or 0.7pc, to $72.87. Brent crude for October was up 45 cents at $75.47 a barrel on the London-based ICE Futures Europe Exchange.
On August 26, crude futures in New York slumped to an 11-week low of $70.76 a barrel following larger-than-expected gains in US crude inventories.
US petroleum stockpiles, a combination of oil and fuel supplies, climbed 8.92 million barrels last week to 1.14 billion, the highest level in at least 20 years, according to an August 25 Energy Department report.
Crude stockpiles rose 4.11 million barrels to 358.3 million barrels last week, the Energy Department said. Inventories were forecast to climb 300,000 barrels.
“Near-term fundamentals in the crude market are far from rosy, having deteriorated lately due to excess supplies and waning demand,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “Persistently negative macro data is continuing to weigh on prices.”
Still, the price of oil may rebound from its 10pc gain in the past three weeks should it rise above its 13-day moving average, according to PVM Oil Associates Ltd.
“The answer lies with the moving averages, and the market mood does not completely change until one is above the 13-day moving average,” Robin Bieber, director at PVM in London, wrote in a report today. “Apart from anything else that’s the signal for the bears to call it a day.”
Oil may rise next week after failing to break through a technical support level, a Bloomberg News survey showed.
Twenty of 49 analysts, or 41 percent, forecast crude oil will increase through Sept. 3. Seventeen respondents, or 35 percent, predicted that futures will be little changed, and 12 projected a decline. Last week, 39 percent of analysts forecast a drop.