Oil traded near its highest in 12 weeks in New York on speculation China’s government will boost the economy of the world’s second-biggest crude consumer, while European leaders prepared to tackle the region’s debt crisis.
Prices gained as much as 0.8 percent after settling yesterday at the highest in almost three months. Chinese Premier Wen Jiabao said economic policy will be fine-tuned as needed and the industry ministry said it is studying “stimulative policies” for smaller companies. European government heads will hold a summit today to agree on a plan to rein in a sovereign- debt crisis that threatens to curb economic growth and slow demand for commodities.
“Crude oil has been extremely macro-driven lately because of the European crisis,” said Filip Petersson, commodity strategist at Stockholm-based SEB AB. “The general trends have been in the same direction as equities.”
Crude oil for December delivery was at $93.45 a barrel, up 28 cents, in electronic trading on the New York Mercantile Exchange at 12:15 p.m. London time. The contract yesterday increased 2.1 percent to $93.17, the highest settlement since Aug. 2. Prices are up 2.3 percent this year.
December futures were at a 19-cent premium to January, compared with 24 cents at yesterday’s close. The front-month contract settled higher than the next month Oct. 24 for the first time since Nov. 20, 2008. The so-called backwardation typically signals an increase in demand or decline in supply in the near term.
Gold May Extend Climb Above $1,700 as European Crisis Concern Spurs Demand
Gold futures may extend an advance above $1,700 an ounce as concerns about Europe’s debt crisis spur demand for the metal as a protection of wealth.
European leaders will hold an emergency summit today in a bid to reach agreement on measures to solve what U.S. Treasury Secretary Timothy F. Geithner called the “catastrophic risk” posed by the turmoil. Holdings of the metal in exchange-traded products climbed to a one-month high yesterday.
“The size of the debt issues are unlikely to go away regardless of what policy makers decide,” analysts at TheBullionDesk.com in London wrote today in a report. “Given this uncertainty we are not at all surprised gold is attracting fresh safe-haven buying.”
Gold for December delivery gained as much as $21, or 1.2 percent, to $1,721.40 an ounce, the highest price since Sept. 23, and was at $1,704.70 by 8:01 a.m. on the Comex in New York. Immediate-delivery gold was 0.1 percent lower at $1,703.53 in London.
Bullion is in the 11th year of a bull market and futures reached a record $1,923.70 an ounce on Sept. 6 as investors sought to diversify away from equities and some currencies. The metal is up 20 percent this year.
The Bundesbank’s gold reserves may be used as collateral in the event that the European Financial Stability Facility can’t meet its payment obligations, German newspaper Bild reported, without saying how it obtained the information. Germany is the second-biggest bullion holder after the U.S., with 3,401 metric tons in reserves, World Gold Council data show.
