Oil Rises After Biggest Loss in Week

BEN SHARPLES | MAY 2011 | SOURCE: Bloomberg

Oil rose in New York, trimming the biggest loss in more than a week, as speculation that Libyan supply cuts will reduce OPEC’s spare production capacity countered concern Europe’s debt crisis is spreading.

Futures climbed as much as 0.9 percent, reversing earlier declines, after Goldman Sachs Group Inc. and Morgan Stanley increased their oil-price forecasts as conflict in Libya prolonged the loss of output.

Oil Rises After Biggest Loss in Week

An Energy Department report tomorrow may show U.S. crude inventories fell last week. Prices slumped 2.4 percent yesterday after the Greek government endorsed budget cuts to win extra aid and stem a market slide.

OPEC Help

“OPEC has probably got room to increase production, so if the market is tight in any way they can come in and help,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who predicted oil will average $115 this year.

The Organization of Petroleum Exporting Countries meets in Vienna on June 8. The International Energy Agency’s statement last week on a “clear, urgent need for additional supplies” is a hint that it may coordinate the release of emergency oil stockpiles if OPEC doesn’t raise production, the London-based Centre for Global Energy Studies said in a oil report yesterday.

The IEA, which was founded in 1974 in response to the Arab oil embargo, coordinates energy policy of 28 developed countries. It said May 19 that high prices threaten economic recovery.

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