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  • August 12th, 2011

Oil Rises in New York as U.S. Retail Sales Climb the Most in Four Months

Oil advanced after U.S. retail sales climbed in July by the most in four months, signaling that spending in the world’s biggest crude-consuming country is holding up.

Futures rose as much as 1.7 percent as the Commerce Department said spending increased 0.5 percent, following a 0.3 percent gain in June that was larger than previously estimated. France, Spain, Italy and Belgium banned short-sales to reverse the fall in financial stocks.

“The retail sales numbers were really good, especially the upward revision of the June number,” said Carl Larry, director of energy derivatives and research with Blue Ocean LLC in New York. “People are even feeling a bit better about the situation in Europe and expect governments to take action to help their banks like we did.”

Crude oil for September delivery climbed $1.37, or 1.6 percent, to $87.09 a barrel at 9:25 a.m. on the New York Mercantile Exchange. The contract is up 0.2 percent this week.

Brent oil for September settlement rose 82 cents, or 0.8 percent, to $108.84 a barrel on the London-based ICE Futures Europe. The European benchmark was at a premium of $21.75 to U.S. futures, down from an intraday record $25.54 yesterday.

Prices in New York dropped as much as 2 percent earlier when reports showed France’s economy failed to grow in the second quarter and manufacturing in the euro region unexpectedly declined in June.

French Economy

France’s economy unexpectedly stalled in the second quarter as consumer spending plunged, Paris-based statistics office Insee said today. Gross domestic product was unchanged from the first quarter, when it rose 0.9 percent, the most in four years.

Industrial production in the euro region fell in June, the European Union’s statistics office in Luxembourg said today. The 0.7 percent decline was led by a drop in capital goods such as machinery, adding to signs the economy is losing momentum as governments struggle to contain the debt crisis.

French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to meet next week after French markets were rattled by concern that the euro-area debt crisis will spread. The leaders of Europe’s two largest economies will discuss economic governance of the 17-nation euro region in Paris on Aug. 16, according to separate statements yesterday.

“Fear is the driving factor,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, whose forecast for prices in the second quarter was third-closest among 29. “In the last few years things have hardly been worse than they are now. We have extremely low growth from the U.S., a slowdown in China, definitely troubles in the euro zone.”

Oil in New York may gain next week as U.S. stockpiles decline and fuel demand increases, according to a Bloomberg News survey. Twelve of 29 analysts and traders, or 41 percent, forecast crude will increase through Aug. 19. Last week, 51 percent of respondents predicted a decrease.


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