Crude oil advances most in two months

NEW YORK (Bloomberg) -- Oil climbed the most in two months, paring a weekly decline as a weaker dollar bolstered the appeal of commodities to investors.

 

Futures rose 3.8% in New York as a gauge of the dollar fell for a third day. Global stocks rebounded from a four-week low amid speculation the UK is less likely to vote to exit the European Union. Low crude prices may persist for 10 to 15 years, Russian Oil Minister Alexander Novak said in a Bloomberg TV interview.

 

"Oil is ripping to the upside as the dollar falls," said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. "After six days of getting hammered the market was ready to move higher and the dollar is offering a reason."

 

Oil’s advance from the lowest level in more than 12 years in February stalled earlier this week on speculation higher prices will encourage more U.S. output just as global disruptions ease. ConocoPhillips has restarted almost three-quarters of oil-sands wells at its Surmont facility in Canada after wildfires forced producers to halt output.

 

West Texas Intermediate for July delivery rose $1.77 to settle at $47.98 on the New York Mercantile Exchange. It’s the biggest gain since April 12. Futures fell 2.2% this week. The contract slid 3.8% to $46.21 Thursday, the lowest close since May 13. Total volume traded was 22% below the 100-day average.

 

Brexit Campaign

 

Brent for August settlement rose $1.98, or 4.2%, to $49.17 on the London-based ICE Futures Europe exchange. It’s the biggest gain since May 11. The global benchmark crude closed at a 61-cent premium to WTI for August delivery.

 

Commodities and equities advanced as campaigning in Britain’s referendum on European Union membership was suspended a second day following the killing of Jo Cox, a Labour lawmaker who was an advocate for staying in the EU.

 

"In the short term prices move on market sentiment," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "Today’s movement is mostly about sentiment and is unrelated to the fundamentals of oil."

 

There are risks that oil prices will fall if production in Canada, Libya or Nigeria rebounds after supply disruptions in those countries, Russia’s Novak said Thursday in St. Petersburg. At current prices, U.S. shale output will probably start recovering early next year, he said.

 

‘Some Rebalancing’

 

“There is some rebalancing, and I believe the oil price will be in the region of $50, maybe $55 for the rest of the year,” Paolo Scaroni, deputy chairman at NM Rothschild & Sons and former CEO of Eni SpA, said in a Bloomberg television interview. “I personally believe there is a cap. If prices go beyond $60, shale oil producers will start all over again.”

 

Rigs targeting crude in the U.S. rose by 9 to 337 this week, capping the first three-week gain since August, Baker Hughes Inc. said Friday. Explorers have dropped more than 1,000 oil rigs since the start of last year.