2012.08.21 23:05:05 Oil Futures Settle at 3-Month High as Euro Rallies

--Euro trading at highest level since early July on optimism about euro zone

--Nymex September crude gains 71 cents to settle at $96.68 a barrel

--Analysts expect a 200,000-barrel rise in crude oil inventories in
EIA's weekly report Wednesday

NEW YORK--Crude-oil futures hit their highest settlement price since
May amid market optimism that struggling euro-zone nations will
receive regional assistance to strengthen their economies.

Light, sweet crude for September delivery rose 71 cents, or 0.7%, to
settle at $96.68 a barrel on the New York Mercantile Exchange. The
September contract expired at the close of the session. The most
actively traded October-delivery contract rose 58 cents, or 0.6%, to
settle at $96.84 a barrel. Brent crude on ICE Futures Europe rose 94
cents, or 0.8%, to settle at $114.64 a barrel.

"The market is obviously on a bull run here," said Andy Lebow, a
broker for Jefferies Bache. "It thinks that the situation in Europe is
going to improve."

The euro hit its highest level since early July--recently trading at
$1.24696 against the U.S. dollar--on hopes that euro-zone leaders
would announce new measures to assist regional economies. Greek Prime
Minister Antonis Samaras has meetings with euro-zone officials and
heads of state later this week.

A weaker dollar makes dollar-denominated commodities more affordable
for traders using foreign currencies.

Oil futures rallied in tandem with the commodity sector as a whole,
but demand for crude oil is insufficient to support the price rise,
Mr. Lebow said.

Still, macroeconomic factors are driving oil more strongly than market
fundamentals, said Phil Flynn, an analyst at Price Futures Group in
Chicago.

"As long as the market believes that they're going to get a bailout
and they're going to get a deal to get things done, it's going to be
very bullish in the short term," Mr. Flynn said.

Investors are awaiting the Energy Information Administration's weekly
U.S. inventory survey, which will be released at 10:30 a.m. EDT
Wednesday.

Analysts are expecting a 200,000-barrel rise in crude oil inventories
in the week ended Friday, according to a Dow Jones Newswires survey.
Analysts also expect a 400,000-barrel drop in gasoline inventories, a
700,000-barrel increase in distillate stocks and a decline in refinery
utilization by 0.2 percentage point.

The American Petroleum Institute, an industry group, said in its own
survey released late Tuesday that U.S. crude stockpiles fell by 6.041
million barrels in the week ended Aug. 17. The API survey also said
gasoline stocks rose by 869,000 barrels and distillate stocks fell by
1.017 million barrels. Refinery runs fell by 0.5 percentage point to
92.1% of capacity, according to the survey.

Market participants are also eyeing the Wednesday release of the most
recent meeting minutes from the Federal Reserve's policy-making arm.

Front-month September reformulated gasoline blendstock, or RBOB, rose
3.44 cents, or 1.1%, to $3.0652 a gallon. September heating oil rose
3.12 cents, or 1%, to $3.1243 a gallon.

Write to Nicole Friedman at nicole.friedman@dowjones.com


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(END) Dow Jones Newswires

August 21, 2012 07:25 ET (11:25 GMT)