BLBG:Oil Trades Near Two-Week High on Speculation U.S. Recovery to Boost Demand
Oil traded near the highest settlement in two weeks amid speculation the U.S. economy will continue to recover, bolstering demand for raw materials in the world’s biggest crude consumer.
Futures were little changed after gaining 6.6 percent last week, the most since the five days ending Oct. 28. Reports today may show U.S. consumer confidence improved to a five-month high and home prices in 20 cities declined at a slower pace. Financial markets from Hong Kong to the U.K. and the U.S. were closed for holidays yesterday.
“Economic indicators, especially in the U.S., are improving,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo, who forecasts oil will trade “more or less” at the $100-level in coming months.
Crude oil for February delivery was at $99.79 a barrel, up 11 cents from the Dec. 23 settlement in electronic trading on the New York Mercantile Exchange at 11:57 a.m. in Singapore. Futures have climbed 9.1 percent this year after increasing 15 percent in 2010.
Brent oil for February settlement traded 20 cents higher at $108.16 a barrel on the London-based ICE Futures Europe exchange. The European contract’s premium to Nymex crude was at $8.44, compared with $8.28 a barrel Dec. 23, the smallest differential based on closing prices since March 8.
Oil Traders Flee
Large traders have pulled out of the oil market in recent weeks, cutting bets to a four-year low as crude climbed above $100 a barrel on rising tension with Iran, then fell on concern over the European economy.
Outstanding contracts among the biggest players in the futures market, including swaps dealers, hedge funds, producers and commercial users, fell by 4.9 percent to 2,207,528 contracts, the lowest since May 2007, in the seven days ended Dec. 20, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Dec. 23.
Oil rose as high as $101.25 on Dec. 13 after Iran announced plans for military exercises in the Strait of Hormuz, a critical waterway for crude shipments, as the U.S. and its allies threatened to increase sanctions over the Persian Gulf country’s nuclear program. Futures plunged as low as $92.52 three days later on speculation that European economic growth may slow, undermining demand.
To contact the reporter on this story: Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
