BS: Oil Advances as German Confidence Tempers U.S. Supply Concern
Sept. 24 (Bloomberg) -- Oil rose, heading for a weekly gain in New York as a jump in German business confidence tempered concerns that fuel demand in the U.S. remains constrained by slack economic growth.
Prices may drop next week on speculation that U.S. inventories will climb as fuel demand declines, a Bloomberg News survey showed. Yesterday the U.S. Labor Department reported that jobless claims unexpectedly increased last week. Still, JPMorgan Chase & Co. sees demand strengthening globally and boosted its price forecast for next year.
“We’re seeing risk sentiment swing back and forth in the crude market,” said Andrey Kryuchenkov, analyst with VTB Capital in London. “We expect to see more macro-based trading as we go ahead.”
The November contract on the New York Mercantile Exchange was at $75.32 a barrel, 14 cents higher, at 10:46 a.m. London time after losing as much as 52 cents, or 0.7 percent, to $74.66 a barrel. Brent crude for November settlement gained 3 cents to $78.14 a barrel on the London-based ICE Futures Europe exchange.
The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 106.8 from 106.7 in August. That’s the highest since June 2007. Economists had expected a drop to 106.4, according to the median of 36 forecasts in Bloomberg News survey.
Seventeen of 30 analysts, or 57 percent, forecast crude oil will decline through Oct. 1. Nine respondents, or 30 percent, predicted little change, and four estimated prices will rise. Last week, 52 percent said crude would decrease.
Tropical Storm
Tropical Storm Matthew may strengthen into a hurricane later today before hitting Honduras and continuing on a course toward Belize and Mexico’s Yucatan peninsula.
Matthew’s winds increased to 50 miles (85 kilometers) per hour from 45 mph three hours earlier, the National Hurricane Center said in a website advisory before 3 a.m. Honduras time. A hurricane warning was in place from Puerto Cabezas in Nicaragua to Limon, Honduras, indicating winds of at least 74 mph are expected within 36 hours.
JPMorgan boosted its Brent forecast for the fourth quarter of this year to $83 a barrel, and expects the European benchmark, which is used to price two-thirds of global oil, to average $90 a barrel in the fourth quarter of 2011, it said in a research note today.
U.S. Inventories
Total consumption of petroleum products averaged 19.2 million barrels a day last week, down 1.8 percent from the seven days ended Sept. 10, the Energy Department reported Sept. 22. U.S. oil stockpiles rose 970,000 barrels to 358.3 million last week. They were forecast to drop 1.75 million barrels, according to the median of analyst estimates in a Bloomberg News survey.
Futures may drop as low as $71.50 a barrel in a short-term consolidation period, according to technical indicators used by traders to predict price movements.
Oil will fall toward intraday lows of $74.25 a barrel reached on Sept. 7 and $73.10 on Aug. 31, said Stephanie Aymes, a London-based cross-commodity technical analyst at Societe Generale SA. The top range of crude’s consolidation is $76.25 a barrel, which is close to the 38.2 percent Fibonacci retracement of the contract’s drop from its $83.91 high on Aug. 4 to $71.49 on Aug. 25.
--With assistance from Christian Schmollinger in Singapore and Mark Shenk in New York. Editors: John Buckley, Raj Rajendran
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
