Brent crude prices rose on Thursday in volatile trading after France and Germany attempted to ease investor uncertainty by saying Sunday's summit to address the eurozone debt problems would go on and a second meeting would be held no later than Wednesday.
The communique said Paris and Berlin wanted talks to start immediately with the private sector for an agreement on the sustainability of Greece's debt. US crude pared losses as the front-month November contract expired and went off the board. The euro turned higher against the dollar and the S&P 500 and Dow Industrials on Wall Street moved up after they fell on uncertainty about whether European leaders would even meet, much less fashion a deal to resolve the region's debt crisis. The unsettled situation in Europe and its potential to stifle demand sent prices for copper, a key industrial metal, to two-week lows, and gold fell for a fourth straight day.
"We're really just waiting on Europe," said Phil Flynn, analyst at PFGBest Research in Chicago. ICE Brent crude for December rose $1.37 to settle at $109.76 a barrel, having traded from $107.31 to $110.17. The expiring US front-month November crude fell 81 cents to settle at $85.30 a barrel, trading from $84.10 to $86.94. US December crude fell 22 cents to settle at $86.07 a barrel.
The 19-commodity Reuters-Jefferies CRB index fell 1.0 percent. Brent's recovery and a forecast for a cold winter helped push US heating oil futures higher. US gasoline futures also ended with a gain. A strengthening La Nina in the United States this winter will cause colder and wetter weather to the North and drier and warmer conditions in the South, government forecasters said. "There are some concerns about oil supplies tightening, which has kept oil somewhat bullish. Relative to the other commodities and equities, it has been the least prone to moving lower," said John Kilduff, partner at Again Capital LLC in New York.
Inventories have tightened in the United States. US crude stocks fell sharply last week, against expectations stockpiles would be higher, according to Wednesday's report from the US Energy Information Administration. Refined products stocks also fell, the EIA said, much more than expected by analysts.
Oil product inventories in the Amsterdam-Rotterdam-Antwerp hub have fallen to their lowest in nearly three years as backwardation, a condition where prices are lower in months further out than front month, has reduced the incentive to store products. While North Sea production problems have been supportive to oil prices and Brent in particular, traders and analysts expect the return of Libyan oil exports to continue unaffected by the death of Libya's ousted leader Muammar Qadhafi.
Gaddafi was killed by fighters who overran his home town Sirte on Thursday. Seaborne oil exports from Opec, excluding Angola and Ecuador, are expected to rise by 240,000 barrels per day (bpd) in the four weeks to November 5, UK consultancy Oil Movements said in its latest weekly estimate.
In the United States, sales of existing homes dropped 3 percent in September, the National Association of Realtors said in another report, dampening some of the optimism created by separate reports showing initial jobless claims fell last week and that factory activity in the US Mid-Atlantic region rebounded.