BLBG: Oil Advances in New York After U.S. Retail Sales Climb More Than Forecast
Oil rose after U.S. retail sales increased more than projected in October, bolstering optimism that the economy of the largest crude-consuming country will expand this quarter.
Futures climbed as much as 1.2 percent after the Commerce Department said sales gained 0.5 percent last month following a 1.1 percent increase in September. The median forecast of 81 economists surveyed by Bloomberg News was a rise of 0.3 percent. Other reports showed wholesale prices dropped in October and manufacturing in the New York region expanded in November.
“Oil got a nice bounce off of the retail number,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The Empire State Index and wholesale price data were also supportive. Any data showing low inflation allows the Fed more freedom to take action to support the economy.”
Crude for December delivery rose 95 cents, or 1 percent, to $99.09 a barrel at 9:53 a.m. on the New York Mercantile Exchange. The contract dropped as much as 63 cents to $97.51 earlier today.
The Brent contract for December settlement, which expires today, gained 90 cents, or 0.8 percent, to $112.79 a barrel on the London-based ICE Futures Europe exchange. The January contract climbed 68 cents, or 0.6 percent, to $111.96.
The Federal Reserve Bank of New York’s general economic index rose to 0.6, the first positive reading since May, from minus 8.5 in October. Readings higher than zero signal the so- called Empire State Index is expanding. The bank covers New York, northern New Jersey, and southern Connecticut.
Producer Prices
The producer price index declined a more-than-projected 0.3 percent after a 0.8 percent gain in September, Labor Department figures showed today in Washington. Economists forecast a 0.1 percent decrease, according to the median of 74 estimates in a Bloomberg News survey. Cooling inflation gives Federal Reserve policy makers more room to spur growth if the economy falters.
Futures fell earlier as Italy’s premier in waiting, Mario Monti, struggled to get political parties to help form his new cabinet. The euro area’s inability to contain its sovereign-debt crisis has led to a surge in Italian borrowing costs with yields on the country’s benchmark 10-year bonds climbing above 7 percent earlier today.
“On the negative side we have ongoing concerns about Europe, putting downward pressure on the market,” Flynn said. “It’s clear that the U.S. economy is showing greater strength than Europe’s.”
Hedge funds and other large speculators raised bullish bets on oil the most since May in the week ended Nov. 8, a Commodity Futures Trading Commission report showed yesterday. Wagers on rising prices increased 7.2 percent to 203,965 futures and options combined.
U.S. crude oil stockpiles probably decreased 1 million barrels in the week to Nov. 11, according to the median estimate of 11 analysts surveyed by Bloomberg News before tomorrow’s Energy Department report.
The industry-funded American Petroleum Institute in Washington will release its supply data today.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
