BLBG: Crude Oil Rises From Lowest Level in Six Weeks as Chinese Equities Gain
Crude oil rose from the lowest level in six weeks after Chinese equities climbed on better-than- expected quarterly earnings, raising optimism that growth in emerging markets will boost fuel demand.
Oil prices increased after China’s stocks extended a weekly gain as machinery companies like Sany Heavy Industry Co. and Changsha Zoomlion Heavy Industry Science & Technology Development Co. reported a surge in first-half profit.
“Going into next year, we’ll see higher crude prices coming through on the back of stronger demand growth from emerging markets and weakening of global supply,” said Neil Beveridge, an analyst at Sanford C. Bernstein & Co. in Hong Kong, in a Bloomberg Television interview.
Crude oil for October delivery rose as much as 48 cents, or 0.7 percent, to $74.30 a barrel on the New York Mercantile Exchange, and was at $74.17 at 1:11 p.m. Singapore time. The September contract fell 97 cents to $73.46 on Aug. 20, when it expired, the lowest since July 6. Futures dropped 2.6 percent last week.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 0.1 percent to 2,645.63 as of 11:30 a.m. local time. It added 1.4 percent last week.
Oil slipped 1.3 percent on Aug. 20, a day after the Labor Department said weekly claims for unemployment benefits in the U.S. climbed to the highest level since November. Purchases of new and existing houses probably dropped 12 percent to a 5.01 million annual pace, the lowest since March 2009, according to the median forecast of 54 economists surveyed by Bloomberg News before reports this week.
Hedge Funds
“Concerns over U.S. growth weighed on oil demand sentiment,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note.
Hedge funds cut bullish bets on gasoline by the most in almost four years as petroleum stockpiles surpassed the highest level since 1990 and the U.S. vacation season drew to an end.
Funds and other large speculators reduced wagers on rising prices by 74 percent the week ended Aug. 17, the most since October 2006, the Commodity Futures Trading Commission reported on Aug. 20.
Stockpiles of the motor fuel have grown in seven out of the past eight weeks, rising 2.7 percent since the middle of June, according to Energy Department data. Motor fuel inventories usually hit a peak for the driving season in June or July. It was the first time since at least 1990 that they were at a seasonal high in August.
Brent crude for October settlement climbed as much as 46 cents, or 0.6 percent, to $74.72 a barrel on the London-based ICE Futures Europe Exchange, and was at $74.60 at 1:09 p.m. Singapore time. The contract dropped $1.04, or 1.4 percent, to $74.26 on Aug. 20.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net
