West Texas Intermediate crude rose from a four-month low on signals that recent losses were exaggerated and as Spain sold more debt than planned.
Futures in New York climbed 1.2% and Brent oil in London rebounded from a nine-month low. The WTI 14-day relative- strength index slid below 30 yesterday, a sign prices may have fallen too far. Commodities advanced with the euro as Spain sold 10-year debt at the lowest yield since September 2010 and borrowing costs for governments across Europe declined.
“Investors are looking at these prices as good value,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “We held above $85 and it now looks like the market will trade in a new $85-to-$100 range.”
WTI crude oil for May delivery rose $1.05 to settle at $87.73 a barrel on the New York Mercantile Exchange. It was the biggest gain since March 26. The contract fell to $85.61 earlier, the lowest intraday price since Dec. 11. The volume of all futures traded was 49% above the 100-day average as of 3:43 p.m.
Brent oil for June settlement advanced $1.44, or 1.5%, to end the session at $99.13 a barrel on the London- based ICE Futures Europe exchange. It was the first increase in six trading days. Brent touched $96.75, the lowest level since July 2. The volume of all futures traded today was 38% higher than the 100-day average.
WTI-Brent Spread
The front-month European benchmark grade settled at a premium of $11.13 to June WTI. The spread ended yesterday at $10.72, the narrowest closing level since Jan. 25, 2012.
WTI’s 14-day relative strength index fell to 27.33 yesterday, its lowest level since June. A reading of 30 or below typically indicates that a market has fallen excessively and is interpreted by traders as an opportunity to buy.
Spain sold 4.71 billion euros ($6.14 billion) of bonds, more than its maximum target of 4.5 billion euros. France sold five-year notes at a record-low rate, while Slovenia hired banks to organize meetings with investors a day after scooping up twice its target in a domestic offering.
The euro rose 0.2% against the dollar, bolstering the appeal of raw materials denominated in the U.S. currency as an investment. The Standard & Poor’s GSCI Index of 24 commodities was up 0.8%, the biggest increase since Dec. 26. Gains were led by natural gas, coffee and crude oil.
“The dollar is weaker, which is giving commodities a boost,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The market has sold off a great deal, which makes futures an attractive buy.”
