Nov. 20 (Bloomberg) -- Oil fell from a one-month high in New York after Egyptian President Mohamed Mursi said that efforts to end a week of fighting between Israel and Palestinian groups in the Gaza Strip will succeed within hours.
Futures dropped as much as 1.3 percent as Mursi said that what he termed Israeli aggression against the territory will end today, Egypt’s state-run Middle East News Agency reported. His comments came as U.S. Secretary of State Hillary Clinton flew to the region to join truce talks that also include United Nations Secretary-General Ban Ki-moon.
“The fact that Clinton is flying to the region at least shows that the U.S. is getting moderately involved in finding a solution,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “This probably just buys us 24 hours. It doesn’t look like there is a quick solution.”
Crude oil for January delivery fell $1, or 1.1 percent, to $88.28 a barrel at 10:46 a.m. on the New York Mercantile Exchange. The contract surged to $89.28 yesterday, the highest settlement since Oct. 19. Prices have declined 11 percent this year.
Brent oil for January settlement slid 54 cents, or 0.5 percent, to $111.16 a barrel on the London-based ICE Futures Europe exchange.
The conflict in Gaza threatens further instability in the Middle East and North Africa after a wave of uprisings since last year, including one in Libya that almost entirely cut crude exports from the north African producer.
Clinton will visit Jerusalem, Cairo and the West Bank town of Ramallah, said Ben Rhodes, White House deputy national security adviser. “The goal on that trip is for everybody to use their voices, their influence, for a peaceful outcome,” he said at a briefing in Phnom Penh, Cambodia.
“The possibility of a cease-fire in the Middle East makes yesterday’s move look overdone,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “We will be paying attention to every headline from the region.”
An Israeli official, who spoke anonymously because of the sensitivity of the matter, said that if talks failed, Israel was prepared to invade. Israeli officials have said any cease-fire must include a long-term agreement with Hamas to halt the firing of rockets that can hit 4.5 million people, or half the country’s population.
Prices also decreased on speculation that an Energy Department report tomorrow will show that U.S. crude inventories rose to a four-month high last week. Stockpiles probably increased by 1 million barrels, according to the median of 11 analyst responses in a Bloomberg survey.
Output increased 32,000 barrels a day to 6.71 million in the week to Nov. 9, the fastest rate since May 1994, the department’s report showed. Production was up for 10 weeks, the longest string of gains since 2008. Inventories also may have increased as Phillips 66’s 238,000 barrel-a-day Bayway refinery in New Jersey remained shut after Hurricane Sandy, which hit the East Coast on Oct. 29.
The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute in Washington will publish its own stockpile data today.