BLBG:Oil Gains Fourth Day On Speculation Economic Prospects Improving
Oil rose for a fourth day in New York after reports signaled improving economic prospects in the U.S. and China and the head of the European Central Bank predicted the euro will survive.
Futures rose as much 0.8 percent, trimming this week’s decline to 1.5 percent. Profits at industrial companies in China fell at a slower rate than previous months while U.S. reports showed bookings for durable goods climbed more than projected and fewer Americans than forecast filed first-time unemployment claims. ECB President Mario Draghi said policy makers will do whatever is needed to preserve the European currency.
“The big thing for risk markets generally was Mario Draghi’s statement,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The implications of that for commodities like oil are that if we can restore some confidence in the markets, then that is a positive for demand.”
Oil for September delivery rose as much as 69 cents to $90.08 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.06 at 2:35 p.m. Singapore time. The contract climbed 0.5 percent yesterday to $89.39, the highest close since July 20. Prices are 8.8 percent lower this year.
Brent crude for September settlement was up $1.04 at $106.30 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $16.19, up from $15.87 yesterday.
Euro Pledge
Oil in New York is climbing above long-term technical resistance at $89.83 a barrel, according to data compiled by Bloomberg. On the weekly chart, that’s the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from an intraday record high of $147.27 in July that year. Sell orders tend to be clustered near chart-resistance levels.
Financial markets surged yesterday on speculation the ECB will act to lower Spanish borrowing costs after yields on the nation’s bonds rose to levels that prompted bailouts for Greece, Portugal and Ireland. The ECB started buying Spanish and Italian debt in August last year as part of its bond-purchase program. The ECB suspended the program in March.
Oil may decline next week on speculation that central banks will take insufficient steps to bolster economic growth, a Bloomberg survey showed.
Eighteen of 30 analysts and traders, or 60 percent, forecast crude will decrease through Aug. 3. Nine respondents, or 30 percent, predicted that futures will increase and three said there will be little change in prices. Last week, 44 percent of analysts projected a drop.
Durable Goods
Orders for durable goods, those meant to last at least three years, rose 1.6 percent in June, the second monthly gain, a report from the Commerce Department showed yesterday. That exceeded the median forecast of economists surveyed by Bloomberg News that called for a 0.3 percent gain. First-time applications for jobless benefits fell 35,000 in the week ended July 21 to 353,000, Labor Department figures showed.
Chinese industrial companies’ profits in June fell 1.7 percent from a year earlier to 467.2 billion yuan ($73 billion), the National Bureau of Statistics said on its website today. That drop was smaller than declines of 5.3 percent in May and 2.2 percent in April.
Iran’s deputy chief nuclear negotiator said his meeting with a European Union official that aimed to establish common ground for another round of talks on the country’s atomic program was “positive.”
“We managed to move forward with the talks within good frameworks and reach agreements on continuation of the work and future talks,” Ali Bagheri said about his July 24 meeting in Istanbul with Helga Schmid, the EU foreign policy chief’s deputy, according to the Islamic Republic News Agency yesterday.
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
