Crude oil gained as the dollar weakened against the euro, while rising equity markets and a demand forecast from OPEC reaffirmed confidence that the recovery will buoy fuel consumption.The Organization of Petroleum Exporting Countries predicted that global oil demand will grow in 2011 at about the same rate as this year, led by developing economies such as China and India. Equities gained as JPMorgan Chase & Co., the second- biggest U.S. bank by assets, said profit rose 76 percent, higher than analysts expected.
“Economic growth will remain high in China and that’s going to continue to support oil prices,” said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo. “I still think the $75 to $80 range will hold as long as we see second quarter results continue to be better than expected.”
Crude for August delivery rose as much as 62 cents, or 0.8 percent, to $77.66 a barrel in electronic trading on the New York Mercantile Exchange and was at $77.14 at 12:39 p.m. London time. Brent crude for August settlement, which expires today on the London-based ICE Futures Europe exchange, was up 36 cents at $77.13 a barrel after falling as low as $76.19. The more actively traded September future was up 45 cents at $77.11.
Worldwide crude oil consumption next year will increase by 1.05 million barrels a day, or 1.2 percent, to average 86.41 million barrels a day, OPEC said today in its first assessment for 2011. This year OPEC predicts demand will grow 950,000 barrels a day, or 1.1 percent, driven by countries outside the Organization for Economic Cooperation and Development.
Dollar Weakens
Futures had fallen 0.7 percent following reports showing that China’s economic growth eased and that U.S. gasoline inventories were 4.3 percent above their five-year average last week. The Federal Reserve said risks to the U.S. outlook “have shifted to the downside” in the minutes of its June meeting released yesterday.
The European currency has recovered from a four-year low of $1.1877 reached on June 7. The dollar traded at $1.2823 against the euro after slipping to $1.2835. A weaker dollar makes oil cheaper for investors in other currencies.
“Oil has been tracking the euro, after it strengthened to $1.28 this morning,” up from its early June lows, said Roland Stenzel, a crude and carbon trader at E&T Energie Handelsgesellschaft mbH in Vienna.
U.S. gasoline inventories are 4.3 percent above their five- year average, even in the midst of the country’s driving season, an Energy Department report showed yesterday. Economic growth in China, the second-largest energy user, slowed to 10.3 percent in the quarter ended June, from 11.9 percent in the first three months of the year, the Beijing-based statistics bureau said.
Brent in BackwardationBrent futures in London for the earliest delivery were more expensive than later contracts for a second day, after settling at a premium yesterday for the first time in almost a year, following North Sea field maintenance.
Yesterday was the first time the contract closest to expiration has settled above the subsequent month since Aug. 14. Before that date, front-month Brent contracts had not consistently traded at a premium since May 2008.
A market in which near-term contracts are more expensive than those further out in time is described as being in backwardation. The reverse condition is called contango.
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