BLBG:Oil Heads for Biggest Weekly Gain Since August on Budget Talks
Oil rose in New York, extending the biggest weekly gain since August, as U.S. lawmakers scheduled talks aimed at averting tax increases and spending cuts that threaten the economy of the world’s largest crude consumer.
Futures advanced as much as 0.7 percent and are up 2.9 percent this week. Democratic and Republican congressional leaders plan to meet with President Barack Obama today as lawmakers seek to resolve a budget impasse before at least $600 billion in fiscal measures start Jan. 1. House Majority Leader Eric Cantor announced the chamber will meet Dec. 30 for its first Sunday session in more than two years. Oil also rose after an industry report showed U.S. stockpiles shrank last week.
“The news encourages the players to bet on a long position,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “Therefore, we’re now seeing some rebound in the financial and oil markets.”
Crude for February delivery climbed as much as 62 cents to $91.49 a barrel in electronic trading on the New York Mercantile Exchange. It was at $91.25 at 2:20 p.m. Singapore time. The volume traded for all contracts was about 45 percent below the 100-day average. Futures slid 11 cents to $90.87 yesterday.
Brent oil for February settlement on the London-based ICE Futures Europe exchange increased as much as 50 cents, or 0.5 percent, to $111.30 a barrel. The volume was 40 percent less than the 100-day average. Prices dropped 27 cents to $110.80 yesterday. The European benchmark crude was at a premium of $19.90 to New York-traded West Texas Intermediate grade. It was $19.93 yesterday, the narrowest closing spread in 10 weeks.
Budget Meeting
Senate Majority Leader Harry Reid, House Speaker John Boehner, House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell are scheduled to attend the meeting with Obama in Washington today, said White House spokeswoman Amy Brundage. Cantor announced plans on Twitter for the Dec. 30 House session, without saying what action the chamber may take.
A failure to reach an agreement on the budget plan might push the U.S. into a recession in the first half of 2013, the nonpartisan Congressional Budget Office has said.
WTI oil has declined 7.7 percent this year, set for the first annual loss since 2008, as a U.S. shale boom deepens the glut at Cushing, Oklahoma, America’s biggest storage hub. That has left it at an average $17.47 a barrel below Brent this year, compared with a premium of about 95 cents in the 10 years through 2010. Brent, the benchmark grade for more than half the world’s crude, has risen 3.5 percent in 2012.
U.S. Stockpiles
U.S. crude inventories fell 1.17 million barrels to 370.5 million last week, the lowest in nine weeks, the industry-funded American Petroleum Institute said yesterday. An Energy Department report today may show a drop of 1.75 million, according to the median estimate of 10 analysts surveyed by Bloomberg News. Supplies at Cushing, the delivery point for WTI contracts, climbed 2.23 million barrels to a record 49.2 million, the API data showed.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Crude may rise next week as stronger economic growth boosts demand, according to another Bloomberg survey. Nine of 18 analysts and traders, or 50 percent, forecast crude will advance through Jan. 4. Eight respondents, or 44 percent, predicted a decrease. Last week, 39 percent projected a gain.
Applications for U.S. unemployment-insurance payments fell by 12,000 to 350,000 in the week ended Dec. 22, bringing the average over the past month to the lowest in more than four years, Labor Department data showed yesterday. Purchases of new houses rose 4.4 percent to the highest level since April 2010, according to the Commerce Department.
To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net
To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net
