BLBG:Oil Near One-Week High on U.S. View; Goldman Cuts Brent Forecast
Oil traded near the highest level in a week in New York amid signs that the economy is recovering in the U.S., the world’s largest crude consumer. Goldman Sachs Group Inc. cut its Brent price forecast by 15 percent.
Futures for West Texas Intermediate oil were little changed after rising 3 cents yesterday. Housing starts in the U.S. surged 15 percent last month to the highest level in four years, exceeding forecasts in a Bloomberg survey of economists. Oil pared gains after a report showed stockpiles were the highest for this time of year since government records began in 1982. Goldman cut its 2013 forecast for London-traded Brent to $110 a barrel from $130.
“We are seeing the green shoots of recovery starting to come through in the U.S.,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “I’m quite optimistic, and I think you should see demand start to pick up.”
Crude for November delivery was at $92.09 a barrel, down 3 cents, in electronic trading on the New York Mercantile Exchange at 3:02 p.m. Singapore time. The contract yesterday closed at $92.12, the highest settlement since Oct. 9. Prices changed less than 25 cents for a fourth consecutive day, the longest streak of small moves since 2003. Oil is down 6.8 percent this year.
Brent oil for December settlement rose 18 cents to $113.40 a barrel on the London-based ICE Futures Europe. The front-month European benchmark grade’s premium to the corresponding WTI contract was at $20.91 a barrel. It settled at $23.95 on Oct. 15, the widest gap since reaching a record on Oct. 14, 2011.
Goldman Forecast
Goldman maintained its near-term forecast of $120 a barrel for Brent on tight physical supply, analysts including New York- based David Greely said in a report yesterday. The European benchmark contract’s premium to WTI will narrow to $4 early next year as the Seaway pipeline reaches full capacity, Goldman said.
U.S. housing starts climbed to an 872,000 annual rate, the most since July 2008, the Commerce Department said. Forecasts from economists surveyed by Bloomberg ranged from 735,000 to 800,000. Building permits, a proxy for future construction, jumped to the most since July 2008. An index of leading indicators by the New York-based Conference Board today is forecast to signal an improving economy.
U.S. crude inventories gained 2.9 million barrels last week to 369 million, the Energy Department said in a report yesterday. They were forecast to rise by 1.5 million, according to the median estimate of nine analysts surveyed by Bloomberg. Production increased for a sixth week to 6.61 million barrels a day, the highest level since May 1995, the report showed. Total petroleum demand rose 4.3 percent to 19.5 million barrels a day.
Fuel Supplies
Gasoline stockpiles climbed 1.7 million barrels, the department said. They were forecast to rise by 500,000 in the survey. Distillate inventories, a category that includes heating oil and diesel, fell 2.2 million barrels, compared with a projected drop of 1.5 million.
Gasoline for November delivery declined 6.36 cents, or 2.2 percent, to $2.7817 a gallon on the New York Mercantile Exchange yesterday, the lowest settlement since July 11. Prices were at $2.7856 today.
Oil may decline in New York after failing to breach technical resistance along its middle Bollinger Band yesterday, according to data compiled by Bloomberg. Futures yesterday halted their advance near this indicator, at around $92.98 a barrel today. Sell orders tend to be clustered near chart- resistance levels.
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
