BLBG:Oil Trades Near Two-Day High on Economic Strength Signals
Oil traded near the highest level in two days in New York before data this week that may show a strengthening U.S. economy, signaling rising fuel demand in the world’s biggest crude-consuming nation.
Futures were little changed after climbing 1.4 percent on March 23. Manufacturers in the U.S. probably received more orders for durable goods in February and consumer purchases climbed the most in five months, economists said data this week will show. West Texas Intermediate crude prices have climbed this year on concern that tension with Iran may lead to military conflict in the Middle East, where more than half the world’s oil reserves are located.
“We’ve priced in the major supply and demand issues, and really in terms of West Texas it’s going to take a fair bit to break us out of that $103.50 to $108.50 a barrel range,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “The swing factor here is the U.S. economy and for that reason I expect, when or if we do see a break, it’s likely to be on the topside.”
Oil for May delivery was at $106.56 a barrel, down 31 cents, in electronic trading on the New York Mercantile Exchange at 1:41 p.m. Singapore time. It rose $1.52 to $106.87 on March 23, the highest close since March 21. Prices are up 7.8 percent so far this year, set for a second quarterly increase.
Brent oil for May settlement was at $124.82 a barrel, down 31 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $18.26.
Technical Support
Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $105.51 a barrel today, according to data compiled by Bloomberg. Buy orders tend to be clustered near chart-support levels.
U.S. bookings for long-lasting factory goods rose 3 percent last month after decreasing 3.7 percent in January, according to the median estimate of economists surveyed by Bloomberg News before a March 28 Commerce Department report. Personal spending increased 0.6 percent last month, boosted in part by stronger auto sales, a separate survey showed before a March 30 report.
“Time is short” to solve the showdown with Iran diplomatically, U.S. President Barack Obama said today in Seoul before a summit on nuclear security. The U.S. and the European Union are imposing sanctions on Iran to halt its nuclear program. The Persian Gulf nation has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil, in response to an embargo on its crude.
Hedge funds lowered bullish oil wagers by 10,579, or 4.1 percent, to 247,827 futures and options in the seven days ended March 20, the Commodity Futures Trading Commission’s Commitment of Traders report on March 23 showed.
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
