Oil climbed to a three-week high in New York after equities rebounded and tension grew between the West and Iran over the Persian Gulf nation’s nuclear program. Crude rose 0.3 percent as stocks advanced on a Financial Times report that the European Union was in talks to double the size of its rescue fund and EU Energy Commissioner Guenther Oettinger signaled the bloc may have agreed to ban oil imports from Iran. Prices retreated earlier as Standard & Poor’s said it may cut European credit ratings. “There’s been a strong correlation between stocks and the oil market recently,” said Kyle Cooper, director of research for IAF Advisors in Houston. “Both oil and the stock markets are waiting for signs of a resolution to the European debt crisis.” Crude oil for January delivery rose 29 cents to $101.28 a barrel at on the New York Mercantile Exchange, the highest settlement since Nov. 16. Futures are up 11 percent this year. Prices were little changed from the settlement after the industry-funded American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil inventories fell 5.04 million barrels to 334.1 million last week. January oil was up 16 cents to $101.15 a barrel in electronic trading
GOLD
Gold prices fell for the second straight day as purchases ebbed in India, the world’s biggest consumer of the metal, and investors awaited a European Union summit on the region’s debt woes. Last week, demand in India slumped 53 percent from a week earlier, according to UBS AG. Standard & Poor’s yesterday said it may cut the credit ratings of 15 countries that use the euro, pending the outcome of the summit that starts Dec. 8 in Brussels. Gold futures pared losses of as much as 1.7 percent. “Given the heavy headline risk and the lingering doubt that politicians will deliver a conclusive solution to the euro-zone crisis, participants feel safer on the sidelines,” Edel Tully, an analyst at UBS in London, said in a report. Gold futures for February delivery fell 0.2 percent to settle at $1,731.80 an ounce at 1:46 p.m. on the Comex in New York. The metal dropped 1 percent yesterday. The price has climbed 22 percent this year, heading for the 11th straight annual gain. Physical demand “may not materialize unless gold sees a bigger correction to $1,680,” Tully said. European Central Bank President Mario Draghi will probably cut interest rates by 0.25 percentage point, according to economists in a Bloomberg survey. Draghi signaled last week that the bank may step up its efforts if euro-area governments forge a closer fiscal union. “It’s almost a certainty that they are going to cut rates, but the bigger drama takes place at the end of the week” with the European summit, Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Gold is waiting, like every other asset class, to see what Europe will do.”