BLBG:Oil Advances to Cap Longest Run of Weekly Gains Since 2009 on Economy
Oil gained, capping the longest streak of weekly advances since April 2009, on speculation that U.S. economic growth and Europe’s efforts to contain the debt crisis will boost fuel demand.
Crude climbed 1.2 percent as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment for November rose to 64.2, higher than economists’ projection of 61.5. Oil also rose today as Italy’s Senate approved a key budget bill to clear the way for new leadership and Greece formed a unity government.
“The fundamentals in the oil market have been pretty good and demand is strong enough to tighten the balance,” said Katherine Spector, a commodities strategist with CIBC World Markets Corp. in New York. “Europe is still a tug-of-war in the oil market and people are watching the headlines.”
Crude for December delivery climbed $1.21 to $98.99 a barrel on the New York Mercantile Exchange, the highest settlement since July 26. Oil increased 5 percent this week, the sixth weekly increase.
Brent oil for December settlement rose 45 cents, or 0.4 percent, to settle at $114.16 a barrel on the London-based ICE Futures Europe exchange. The contract was at a premium of $15.17 to New York futures, the lowest level since June 24.
“The market continues to rise on any kind of positive economic news,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Europe is not completely out of the woods, but they seemed to have dodged the bullets for this time around.”
Italian Vote
Italy’s Senate approved the debt-reduction package in a bid to cut the country’s debt of 1.9 trillion euros ($2.6 trillion), shore up investor confidence and pave the way for a new government that may be led by former European Union Competition Commissioner Mario Monti.
The timing of the ballot was moved forward after Prime Minister Silvio Berlusconi’s parliamentary majority unraveled this week, leading bond yields to surge to euro-era records.
Lucas Papademos, a former vice president of the European Central Bank, has been sworn in as prime minister of a Greek unity government.
“The debt crisis seems to fade with the new government in Greece and maybe Italy as well, but this should be only temporary,” said Carsten Fritsch, an analyst in Frankfurt at Commerzbank.
Equities Rally
Oil also advanced as U.S. stocks rallied and the dollar weakened against the euro, said McGillian.
The Standard & Poor’s 500 Index added 1.9 percent to 1,263.85 at 4:03 p.m. in New York. The Dow Jones Industrial Average (INDU) rose 2.2 percent to 12,153.46. The S&P’s GSCI Index of 24 raw materials advanced 0.7 percent to 665.92.
The Dollar Index, which tracks the U.S. currency against six major peers including the euro and the yen, slid 1.1 percent to 76.916. A weaker dollar increased oil’s appeal as an investment alternative.
Oil moved up in four of the five trading days this week as data showed falling inventories and rising consumption.
Crude oil stockpiles fell 1.37 million barrels to 338.1 million in the week ended Nov. 4, the Energy Department reported on Nov. 9. Stockpiles were forecast to rise 500,000 barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.
Total petroleum consumption rose 7.5 percent last week to 20 million barrels a day, the department reported.
“Tightening supplies in the U.S. could be one explanation” for higher prices, said Fritsch.
Crude may fall next week, analysts and traders forecast in a Bloomberg News survey. Nineteen of 33 forecast a decline, 10 projected an increase, and four predicted little change.
Oil volume in electronic trading on the Nymex was 523,269 contracts as of 4:04 p.m. in New York. Volume totaled 662,554 contracts yesterday. Open interest was 1.39 million contracts.
To contact the reporters on this story: Moming Zhou in New York at mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
