* TransCanada restricts Keystone August supplies
* Citi, Google earnings give early lift
* US consumer sentiment lowest since March 2009
* Coming up: CFTC positions data, 3:30 p.m. EDT, Friday
(Recasts, updates prices to settlement, market activity)
By Gene Ramos and Matthew Robinson
NEW YORK, July 15 Oil rose on Friday on lower
supplies for a Canadian export pipeline and Wall Street's
advance on favorable results of a stress test on European
banks, which offset a rash of weak U.S. economic data.
Oil got an early lift after Google and Citigroup reported
earnings. Crude also got support from short-covering ahead of
the weekend, plus trading of options on the New York Mercantile
Exchange, market players said.
"There is pre-weekend short-covering going on as nobody
wants to be short at this time with so many things going on,"
said Phil Flynn, analyst with PFBEST Research in Chicago.
Wall Street's early support to the oil market was partly
dented after data showed U.S. consumer confidence plummeted in
early July to its lowest level in more than two years and
factory output in New York State stalled in June. The data
dimmed hopes for a quick economic rebound in the second half.
Stalled negotiations between President Barack Obama and
Republican lawmakers to avoid a U.S. government default also
prompted concern in financial markets. [ID:nN1E76D26R]
Later, the euro rose against the U.S. dollar after the
number of European banks that failed the stress test was within
In late trading, the greenback was down 0.12 percent
against a basket of currencies. .DXY. Weakness of the dollar
usually increases commodities investors' appetite for risk.
U.S. crude for August delivery CLc1 settled at $97.24 a
barrel, gaining $1.55 and rising for a third straight week.
The September contract CLU1 closed at $97.60, up $1.49, or
In London, ICE Brent for September delivery LCOc1, the
new front month, closed at $117.26, up $1. For the week it
posted a $1.07 loss, after gaining two consecutive weeks.
The premium of Brent to U.S. crude futures CL-LCO1=R
narrowed to $19.66, from more than $22 on Thursday, on news
that TransCanada Corp will cut nominated crude volumes on its
Keystone pipeline to the United States from Canada by 20
percent next month due to maintenance. [ID:nN1E76E0F5]
The day's volumes were thin, with U.S. crude trading
500,7300 contracts as of 3:25 p.m. EDT (1925 GMT), nearly 28
percent below the 30-day average. In London, Brent crude traded
281,006 contracts, 49 percent below the 30-day average,
according to Reuters data.
MORE IEA INJECTIONS, U.S. STIMULUS?
The market also weighed the possibility of a second round
of releases by members of the Paris-based International Energy
Agency of emergency oil reserves after an initial injection of
60 million barrels annnounced on June 23.
However, Germany and Italy were likely to oppose a second
infusion and that could block a further release as full backing
of all 28 IEA members is needed for such a a decision to stick.
Oil prices rose on Wednesday after U.S. Federal Reserve
Chairman told a U.S. House congressional panel that the central
gbank stood ready to ease monetary policies if the economy
But on Thursday prices fell back after Bernanke, in a
separate testimony to a Senate panel, doused expectations of a
new round of easing, dubbed QE3, saying the Fed was not yet
ready to do so and citing recent inflationary pressures.
With Friday's crop of unfavorable economic data, however,
some market pundits have raised the argument that those bleak
reports precisely could be the fodder for QE3.
"In my view, the disappointing economic data, the Empire
Manufacturing Index and Consumer Confidence, would seem to
support and give the Federal Reserve cover for another round of
quantitative easing and its commoditiy inflation effects," said
John Kilduff, partner at Again Capital LLC in New York.
(Additional reporting by Claire Milhench and Ikuko Kurahone in
London, Alejandro Barbajosa in Singapore; Editing by David