Oil climbed the most in more than a week after a report showed that confidence among U.S. consumers rose to a six-month high and as European leaders agreed to boost the region’s rescue fund and tighten budget rules.
Futures gained 1.1 percent after Thomson Reuters/University of Michigan preliminary index of consumer sentiment increased to 67.7 in December from 64.1 at the end of last month. European countries announced steps to ease the area’s debt crisis without forging an accord among all European Union members.
“The consumer confidence number is another positive signal about the U.S. economy,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We seesawed earlier today as people tried to get a handle on the results of the European summit. The agreement is starting to give the market some reassurance.”
Crude oil for January delivery advanced $1.07 to settle at $99.41 a barrel on the New York Mercantile Exchange. It was the biggest gain since Nov. 29. Futures have increased 8.8 percent this year. Prices decreased 1.5 percent this week because of rising U.S. stockpiles and concerns about the debt crisis.
Brent oil for January settlement increased 51 cents, or 0.5 percent, to end the session at $108.62 a barrel on the London- based ICE Futures Europe exchange.
The U.S. consumer confidence reading was projected to rise to 65.8, according to the median estimate of 73 economists surveyed by Bloomberg News.
The U.S. was the world’s biggest oil-consuming country in 2010, responsible for 22 percent of global oil demand, according to BP Plc’s Statistical Review of World Energy released on June 8. The 17 countries using the euro accounted for about 12 percent of world demand last year, BP figures show.
Debt Rules
The European countries enshrined debt rules in a new treaty that leaves out the U.K. instead of amending EU agreements that date back to the 1950s.
European Central Bank President Mario Draghi hailed a “very good outcome” a day after he damped expectations that a deal would prompt the ECB to step up its bond-buying.
The agreement added 200 billion euros ($267 billion) to the region’s war chest and tightened rules to curb future debts. The leaders sped the start of a 500 billion-euro rescue fund to next year and diluted a demand that bondholders shoulder losses in rescues.
Market Driver
The Standard & Poor’s 500 Index (SPX) gained 1.7 percent, and the Dow Jones Industrial Average advanced 1.5 percent at 3:06 p.m. in New York on the rescue fund and the U.S. confidence figure.
“The oil market is being driven for the most part by what’s happening in equities,” said Kyle Cooper, director of research for IAF Advisors in Houston. “We could open a dollar higher or lower Monday based on the weekend headlines from Europe.”
Oil may fall next week on concern that the summit won’t ease concerns about the spread of the debt crisis, a Bloomberg News survey showed. Eleven of 27 analysts and traders, or 41 percent, forecast oil will decrease through Dec. 16. Nine respondents, or 33 percent, predicted futures will increase and seven estimated there will be little change.
EU governments are also considering imposing stiffer sanctions on Iran, OPEC’s second-largest oil producer after Saudi Arabia, amid “serious and deepening concerns” over the country’s nuclear program, according to a draft EU summit statement. Foreign ministers will decide on the next set of sanctions Jan. 30, the statement showed.
Japan issued new sanctions against Iran over the country’s suspected nuclear weapons program, the Trade Ministry said in a statement today in Tokyo.
Iranian Output
Iran pumped about 5 percent of the world’s crude last year, based on BP’s data. The country is on the Strait of Hormuz, through which about a fifth of global oil supply is transported, according to the U.S. Energy Department.
The Organization of Petroleum Exporting Countries may set a new collective production quota at its meeting in Vienna on Dec. 14 without setting individual country allocations, according to consultant PFC Energy. The group has not changed output targets since 2008.
Nymex will cut the margin requirement on crude and heating oil futures from the close of business Dec. 12, CME Group Inc., the exchange’s parent company, said yesterday. The margin for light sweet crude will be $7,560 per contract, 6.7 percent lower than the current level. The exchange last reduced the margin to $8,100 from $8,437.50 in May.
Oil volume in electronic trading on the Nymex was 555,760 contracts as of 3:06 p.m. in New York. Volume totaled 647,193 contracts yesterday, 1.8 percent below the three-month average. Open interest was 1.33 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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