Oil Trades Near One-Week High in London on Fed Speculation

GRANT SMITH | AUGUST 2011 | SOURCE: Bloomberg

Oil traded near its highest in a week in London on speculation that the Federal Reserve may announce new measures to stimulate the economy, and after U.S. crude inventories declined.

Federal Reserve Chairman Ben S. Bernanke may outline steps to bolster the world’s largest economy in a speech tomorrow. Crude inventories fell for a second week last week, slipping by about 2 million barrels, U.S. government data showed yesterday.

Oil Trades Near One-Week High in London on Fed Speculation

Saudi Arabia may cut production if a resumption of Libyan exports pushes the price of Brent crude down toward $90 a barrel, according to the Centre for Global Energy Studies.

“Risk aversion has decreased and that’s helped oil,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna and the fifth most-accurate forecast of Brent prices in the eight quarters to June. “The strength of Brent is a bit of a surprise. We should see substantial Libyan volumes come back by the middle of next year."

Brent oil for October settlement on the London-based ICE Futures Europe exchange gained as much as $1.05 a barrel, or 1 percent, to $111.20, the highest price since Aug. 17. It was at $110.73 a barrel at 1:40 p.m. London time. The European benchmark contract was at a premium of $25.06 to U.S. futures, down from a record $26.21 on Aug. 19.

On the New York Mercantile Exchange, crude for October delivery was at $85.67 a barrel, up 51 cents. Yesterday, the contract lost 28 cents to $85.16, the lowest close since Aug. 22. Prices have gained 18 percent from a year ago.

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