BLBG:Oil Heads for Second Week of Gains on Economic Outlook; Brent-WTI SpreadQ
Oil pared its second week of gains in New York on speculation that fuel supplies are sufficient to meet the boost in consumption from the economic recovery.
The U.S. added 105,000 jobs in June, almost double the 54,000 created a month earlier, according to the median estimate in a Bloomberg News survey before a Labor Department report today. Crude supplies fell 0.3 percent to 358.6 million barrels last week, the Energy Department said yesterday. That’s still above the five-year average of 345 million, according to data compiled by Bloomberg.
“We’ve seen a healthy pick-up in U.S. demand but there’s also a good supply situation in the world market,” said Tobias Merath, head of commodities research at Credit Suisse AG in Zurich. “Despite the good economic news we have doubts about whether prices can really move substantially higher from here.”
Crude for August delivery on the New York Mercantile Exchange was at $98.53 a barrel, down 14 cents, at 9:27 a.m. London time, after gaining as much as 30 cents to $98.97 and falling as low as $98.34. The contract yesterday climbed to $98.67, the highest since June 14. Prices are 3.8 percent higher this week and up 31 percent in the past year.
Brent oil for August settlement fell 67 cents, or 0.6 percent, to $117.92 a barrel on the London-based ICE Futures Europe exchange. The contract surged 4.4 percent yesterday.
Record Spread
Oil’s advance in New York may stall before prices reach $100 a barrel because of technical resistance at the 50-day moving average, according to Bloomberg data. This level is at $99.19 today. Futures have been trading below the indicator for more than two months.
Brent’s premium to New York crude futures is headed for a second weekly gain after widening the most in almost four months yesterday as Libyan output cuts and North Sea maintenance drive the European benchmark grade higher.
Futures in London were $19.39 a barrel higher than West Texas Intermediate in New York yesterday, after widening $2.95 yesterday, the most since March 9. The gap between front-month futures of both grades surged to a record $22.29 on June 15.
“The ECB’s decision to raise interest rates led to a bigger rise in Brent than in WTI,” said Gordon Kwan, head of regional energy research at Mirae Asset Securities Ltd. in Hong Kong. Mirae forecasts Brent’s premium to WTI to widen to $40 a barrel in the next 12 months.
U.S. crude supplies fell 889,000 barrels to 358.6 million last week, the lowest level since April, an Energy Department report showed. A 2.5 million-barrel decline was projected, according to the median estimate of 15 analysts surveyed by Bloomberg News.
Stockpiles of crude at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, the grade traded in New York, slipped 460,000 barrels to 37 million barrels last week, the Energy Department report showed.
A 2.5 million-barrel decline in total U.S. crude supplies was projected for last week, according to the median estimate of 15 analysts surveyed by Bloomberg News. The U.S. is the world’s biggest consumer of the commodity.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
