Oil Rises After Losses Seem Excessive

Brent crude rebounded from its lowest closing level in 14 months amid speculation that losses have been excessive amid risks to Middle Eastern supply. West Texas Intermediate was steady before U.S. inventory data.

Brent futures advanced as much as 0.8 percent in London, having lost 5.2 percent in the past month. Iraqi security forces stepped up attacks against Islamic State militants after ousting fighters from the country’s largest dam with U.S. air support. Crude stockpiles in the U.S. probably dropped by 1.75 million barrels while gasoline and distillate supplies shrank for a third week, a Bloomberg News survey shows before an Energy Information Administration report.

“It would take extraordinary circumstances to drive prices lower on a sustained basis,” David Wech, an analyst at consultants JBC Energy GmbH in Vienna, said in a report. “We thus see prices slowly recovering over the coming months to levels back above $105.”

Brent for October settlement climbed as much as 81 cents to $102.37 a barrel on the London-based ICE Futures Europe exchange and traded for $101.87 at 1:24 p.m. local time. The volume of all futures traded was about 29 percent above the 100-day average for the time of day. Brent settled at $101.56 yesterday, the weakest since June 25, 2013. It reached a premium of $9.13 to WTI, the most on an intraday basis since June 19.

WTI for October delivery, the U.S. benchmark’s most active contract today, was at $93.14 a barrel in electronic trading on the New York Mercantile Exchange, up 28 cents. The September contract, which expires today, rose as much as $1.77 to $96.25. Front-month prices have declined 3.2 percent this year.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza