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Oil Rises in New York on Speculation Last Week’s Drop Overdone

Published: September 25, 2012 | 9:24 am
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Oil rose in New York after falling for a fifth time in six days on speculation that the drop was exaggerated.

Futures advanced as much as 0.9 percent after front-month prices slid 6.2 percent last week. Hedge funds increased bullish oil bets for a fifth straight week on speculation that the Federal Reserve’s latest round of economic stimulus will boost hiring and bolster demand. Brent crude rose as much as 0.9 percent after dropping below $110 a barrel yesterday.

“Crude most likely overshot on the down side last week,” said Filip Petersson, an analyst at SEB AB in Stockholm. “We would most likely have seen lower prices now if it had not been for talk of quantitative easing. There are potential bearish influences out there, coming in the short term from Europe and current discussions with Greece and Spain. Oil markets have also still not fully understood the impact of the Chinese slowdown.”

Oil for November delivery increased 81 cents to $92.74 a barrel in electronic trading on the New York Mercantile Exchange as of 8:52 a.m. in London time. It earlier gained as much as 84 cents to $92.77. The contract fell to $91.93 a barrel yesterday, the lowest close since Sept. 20. Prices are down 6.2 percent this year.

Brent for November settlement gained 66 cents to $110.47 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $17.73, from $17.88 yesterday.

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