Crude oil fluctuated amid concern that European Union leaders won’t reach an agreement at a summit this weekend on strengthening the region’s rescue fund and on an unexpected expansion in Philadelphia manufacturing.
Futures were little changed after the newspaper Die Welt reported that Germany doesn’t rule out postponing the EU summit planned for Oct. 23. The delay would occur because of stalled negotiations about the so-called leveraging of the European Financial Stability Facility, the newspaper reported, citing unidentified people close to the country’s governing coalition. The Federal Reserve Bank of Philadelphia’s general economic index increased to 8.7 from minus 17.5 last month, the biggest one-month rebound in 31 years.
“We’re getting reports that there may not be an agreement this weekend after all,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The market continues to move back and forth on the latest headlines on the European debt situation.”
Crude oil for November delivery rose 3 cents to $86.14 a barrel at 10:19 a.m. on the New York Mercantile Exchange. November futures expire today. December oil, the most-actively traded contract, rose 7 cents to $86.36.
Europe’s new bailout fund may be authorized to provide credit lines amounting to as much as 10 percent of a country’s economy, a draft document shows. Some lawmakers from German Chancellor Angela Merkel’s coalition said the changes, if approved at the Oct. 23 European Union summit in Brussels, may shift intolerable burdens to German taxpayers.
EFSF Draft Guidelines
The enhanced fund may be able to offer loans to countries “before they face difficulties raising funds” in bond markets, the draft guidelines obtained by Bloomberg News show. The document also says that the EFSF, which is authorized to buy government debt, should buy no more bonds in the primary market than private investors.
“We don’t know how the European debt crisis will work out, so the market will move wildly on any small bit of news,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.3 billion. “The situation in Europe is every bit as serious as the conditions just before the failure of Bear Stearns and Lehman Brothers.”
The bankruptcy of Lehman Brothers Holdings Inc. in September 2008 and the near collapse of Bear Stearns Cos. earlier that year helped usher in the global recession.
