Economy- Oil Futures Rise as Traders Bet U.S. Lawmakers Will Soon End Standoff –

Posted: October 10, 2013 in Uncategorized

Oct. 10, 2013

NEW YORK–Oil futures rallied Thursday as traders expressed optimism that U.S. lawmakers would soon end the standoff over the country\’s budget and avoid the possibility of default on its debt.

Light, sweet crude for November delivery settled $1.40 higher, or 1.4%, to $103.01 a barrel on the New York Mercantile Exchange, regaining many of the losses from a sell-off in the prior session.

Brent crude on ICE Futures Europe also climbed to its highest level in nearly a month, rising $2.74, or 2.5%, to $111.80. The contract posted its highest settlement value since Sept. 13.

The sharp gains for the European benchmark were fueled by renewed concerns about the security of the crude supply in the Middle East after the Libyan prime minister was kidnapped and later freed by former rebels.

The U.S. contract, known as West Texas Intermediate, or WTI, reversed earlier declines Thursday on reports that Republicans plan to unveil a proposed six-week extension of the country\’s borrowing limit that doesn\’t include additional policy conditions.

The development could present a potential breakthrough in the standoff that has led to 10-day partial U.S. government shutdown. The political impasse has sparked worries that the nation could breach its debt ceiling.

\”Fears are going away that the country might default,\” said Andy Lipow, president of Lipow Oil Associates, a consulting firm, adding that the increase in crude prices seemed to correlate with the sharp move in equities as stocks soared to their second-best day this year.

Meanwhile, Brent futures were boosted by geopolitical events Thursday after Libyan Prime Minister Ali Zeidan\’s brief abudction. The incident raised worries again about the country\’s ability to rebound from labor disputes that nearly crippled its crude output.

With strikes at its oil export terminals, Libya reported a decline of 190,000 barrels a day in its oil output last month, while August production averaged just 407,000 barrels a day. The country\’s oil minister recently said Libya\’s production had bounced back to 700,000 barrels a day, though that is well below the 1.4 million barrels it produced a few months ago.

In a research note, Barclays analyst Helima Croft wrote \”today\’s event puts further roadblocks on negotiations with [eastern Libya] to resume output, but it also heightens the likelihood of future relapses in Libyan output for 2014.\”

Crude prices have been largely under pressure over the past month as a potential military strike against Syria is now likely off the table, though traders continue to remain on edge about possible supply disruptions in the Middle East, a region that produces about a third of the world\’s oil.

Earlier Thursday, market participants pushed oil futures up by nearly $1 after they misread a tweet from the official Twitter account for the Israeli military.

The account had sent out a tweet marking the 40th anniversary of the Yom Kippur War, a conflict in 1973 in which Egypt and Syria fought against Israel. The tweet, posted Thursday morning before 10:30 a.m. EDT, recalled the Israeli air force bombing airports in Syria 40 years ago and included a link to a day-by-day account of the 19-day war.

Front-month November reformulated gasoline blendstock, or RBOB, also rose sharply Thursday, climbing 7.51 cents, or 2.9%, to $2.6981 a gallon. Prices were boosted by hopes that the shutdown will soon end as hundreds of thousands of federal workers are temporarily are out of work, which could hurt gasoline demand in the near term.

November heating oil climbed 5.26 cents, or 1.7%, to $3.0700 a gallon.

via Oil Futures Rise as Traders Bet U.S. Lawmakers Will Soon End Standoff –


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