BLBG:Brent Rises to 9-Month High as German Business Confidence Beats Forecasts
Brent crude rose to its highest level in more than nine months after German business confidence surpassed forecasts, reflecting optimism that steps to resolve Europe’s debt crisis will be successful.
Brent futures in London advanced as much as 1 percent to their strongest since May 3. The Munich-based Ifo institute’s business climate index climbed for a fourth month to its highest reading since July. The U.S. criticized the refusal of Iran, OPEC’s second-biggest crude producer, to permit United Nations inspectors access to a suspected nuclear base. Crude in New York was little changed after a report showed U.S. stockpiles increased last week.
“With European policymakers now on a clearer path to protect global markets from any potential spillover from a disorderly Greek default scenario, downside risks from a complete macroeconomic meltdown are receding fast,” said Amrita Sen, an analyst at Barclays Plc in London.
Brent oil for April settlement rose as much as $1.19 to $124.09 a barrel on the ICE Futures Europe exchange in London and was at $123.93 at 10:52 a.m. local time. The European benchmark contract’s premium to New York-traded West Texas Intermediate widened to $17.64 a barrel from $16.62 yesterday.
On the New York Mercantile Exchange, crude for April delivery was at $106.29, up 1 cent. The contract rose yesterday to $106.28, the highest close since May 4. New York futures have risen 3 percent this week on speculation that tensions with Iran over its nuclear program will threaten supplies. Prices have gained 8.4 percent in the past year.
German Business Confidence
The Ifo institute’s German business climate index, based on a survey of 7,000 executives, climbed to 109.6 from 108.3. Economists had predicted a reading of 108.8, according to the median of 38 estimates in a Bloomberg News survey.
Oil markets are currently well supplied, Saudi Arabia’s deputy oil minister told reporters today in New Delhi.
“The market is very much well supplied and there’s no need for concern,” Prince Abdulaziz bin Salman said. “We have demonstrated to our friends here how much excess capacity there is today and how much capacity will be there in the future.”
U.S. inventories rose by 3.55 million barrels, the American Petroleum Institute said. A government report today may show they gained by 1.35 million barrels, according to a Bloomberg News survey of analysts.
Gasoline Stockpiles Rise
Gasoline supplies rose 314,000 barrels last week, figures from the industry-funded API showed. They are projected to increase 250,000 barrels in the Energy Department report, according to the median of 10 analyst estimates in the survey. Distillate inventories, a category that includes diesel and heating oil, gained 630,000 barrels compared with a forecast for a 1.5 million barrel decline.
The survey also estimated that refineries operated at 83.5 percent of capacity in the seven days ended Feb. 17, down 0.5 percentage point from the prior week’s one-month high.
The Energy Department is scheduled to release its weekly report at 11 a.m. today in Washington, a day later than usual because the government and financial markets were closed for the Presidents’ Day holiday. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines and files the reports with the government for the report.
Relative Strength
Oil’s advance in New York is stalling after the 14-day relative strength index climbed above 70 yesterday for the first time since Nov. 16, according to data compiled by Bloomberg. This indicates futures have risen too quickly and further gains aren’t sustainable. Investors tend to sell contracts when prices are considered overbought. Today’s reading is about 68.4.
Goldman Sachs Group Inc. recommended buying September crude futures on the Nymex on speculation supplies will tighten after the reversal of the Seaway pipeline in June, according to a weekly report e-mailed today. The bank also advised investors to stop buying July Brent contracts in London.
The 500-mile (800-kilometer) pipeline owned by Enterprise Products Partners LP and Enbridge Inc. will allow oil from the Midcontinent to reach the Gulf of Mexico for export.
Prices advanced yesterday after officials from the International Atomic Energy Agency were denied access to an Iranian military base. The U.S. and Israel haven’t ruled out air strikes against Iran’s nuclear facilities, escalating tensions in a region that’s home to 54 percent of global oil reserves.
Iran’s refusal to allow access to sites where Western intelligence agencies have reported suspected nuclear weapons work is “another demonstration of Iran’s refusal to abide by its international obligations,” White House spokesman Jay Carney said yesterday.
Iran produced 3.5 million barrels of oil a day last month, according to analysts’ estimates compiled by Bloomberg. Saudi Arabia, the biggest member in the Organization of Petroleum Exporting Countries, had output of 9.7 million barrels a day.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
