BLBG:Oil Heads for Weekly Decline as Economy Counters Mideast Tension
Oil headed for the fourth weekly decline in five in New York as signs of a slowing economy in the U.S., the world’s biggest crude user, countered concern that rising tension in the Middle East threatens to disrupt supplies.
West Texas Intermediate futures were little changed after falling 1 percent yesterday as reports showed U.S. unemployment claims at the highest level since April 2011 and manufacturing shrinking in the northeast of the country. Crude stockpiles climbed to 375.9 million barrels, the most since July, as output rose to an 18-year high, according to the Energy Department. Oil pared losses after Israel said it’s ready to escalate military operations against Gaza.
“Markets are focused on the demand equation and at this stage it looks quite muted and likely to remain that way,” said David Lennox, a resource analyst at Fat Prophets in Sydney. The Israeli conflict “is something to keep in the back of the mind and that’s where traders at this stage have got it,” he said.
Crude for December delivery, which expires today, was down 1 cent at $85.44 a barrel in electronic trading on the New York Mercantile Exchange at 12:53 p.m. Singapore time. The more- actively traded January contract was down 4 cents at $85.83. The front-month future dropped 87 cents yesterday to $85.45 and is down 0.7 percent this week. Prices have fallen 14 percent this year.
Brent for January settlement fell 3 cents to $107.98 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark grade’s premium to the corresponding WTI contract was at $22.15, from $25.53 yesterday.
Crude Inventories
Oil in New York remains in a downtrend channel on the daily chart, signaling price advances may not be sustainable, compiled by Bloomberg show. Futures have traded between the middle and lower Bollinger Bands for almost two months. These indicators, representing technical resistance and support levels respectively, are around $87.80 and $82.30 a barrel today.
U.S. crude stockpiles rose 1.09 million barrels last week, the Energy Department reported. They were forecast to climb 2.65 million, according to the median estimate of 10 analysts surveyed by Bloomberg News. Oil output gained for a 10th week to 6.71 million barrels a day, the most since May 1994.
Gasoline inventories fell 440,000 barrels, the data show. They were projected to slide 1 million barrels, according to the survey. Distillate supplies, a category that includes heating oil and diesel, declined 2.5 million barrels compared with a forecast 950,000 barrel drop in the Bloomberg survey.
Missile Attack
Applications for jobless benefits surged by 78,000 to 439,000 in the week ended Nov. 10, according to data from the Labor Department yesterday. Indexes of manufacturing by the Federal Reserve Bank of New York and the Philadelphia Fed showed contractions for this month.
Oil may decline next week on concern weaker economic growth will reduce fuel demand and boost inventories, a Bloomberg survey showed. Sixteen of 33 analysts and traders, or 48 percent, forecast crude will decrease through Nov. 23. Thirteen respondents, or 39 percent, predicted a gain. Four forecast little change.
A long-range missile attack on Tel Aviv yesterday by Palestinian militants in Gaza “is an escalation and there will be a price to pay,” Ehud Barak, Israel’s defense minister, said on Channel 2 television. Israel Army Spokesman Brigadier General Yoav Mordechai told the same channel that the military was calling up 30,000 reservists.
Israel on Nov. 14 began a military operation termed Pillar of Defense against militants in the Gaza Strip. At least 13 Palestinians have been killed in Israeli military strikes, including the leader of the Hamas military wing, and three Israelis died in one of 200 rocket attacks launched from Gaza.
The Organization of Petroleum Exporting Countries will boost crude shipments to the highest level since April as refineries in Asia return from seasonal maintenance, according to Oil Movements. OPEC will raise exports by 700,000 barrels a day, or 2.9 percent, to 24.52 million a day in the four weeks to Dec. 1, compared with 23.82 million a month earlier, the tanker- tracker said yesterday in an e-mailed report.
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
