BLBG: Oil Rises as Five Days of Decline Makes Commodities Attractive to Purchase
Crude oil rose for the first time in six days in New York as last week’s decline and the outlook for global growth made the price attractive to investors.
Crude’s 14-day relative strength index dropped below 40 last week for the first time since May 26, approaching a level that may signal an imminent rebound. China’s Premier Wen Jiabao said over the weekend the government will ensure “steady and relatively fast” growth.
“The oil price is stabilizing after last week’s heavy losses and seems set to stay within the $70-to-$75 trading band it’s occupied since mid-May,” said Christopher Bellew, a senior broker with Bache Commodities Ltd. in London.
Crude oil for August delivery gained as much as 56 cents to $72.70 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.42 a barrel at 10:48 a.m. London time. Brent crude oil for August settlement rose as much as 63 cents, or 0.9 percent, to $72.28 a barrel on the ICE Futures Europe exchange in London. There will be no floor trading on the Nymex today because of the U.S. Independence Day holiday.
Prices remain near their lowest levels in three weeks amid concern that the recovery in China, the second-largest oil consumer, is slowing. Auto sales growth in the country slowed in June and a services-industry index slid to a 15-month low.
Crude dropped 8.5 percent in the week through July 2, the biggest decline in two months, after reports of slowing economic expansion in the U.S. and China, the world’s two largest energy consumers. Futures have declined 8.6 percent since the start of the year.
Slowing Manufacturing
On July 2 prices in New York fell to $71.62 a barrel, their lowest level since June 8, after the Labor Department said payrolls decreased by 125,000 last month as the government cut temporary census workers. A 1.4 percent reduction in May bookings with manufacturers was the biggest since March 2009, the Commerce Department said. Economists in a Bloomberg News survey projected a 0.5 percent drop.
Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended June 29, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 37,120 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 2,515 contracts, or 6 percent, from a week earlier.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
