BLBG:Oil Trades Near Four-Month High as China’s Economy Accelerates
Oil traded near the highest price in four months in New York and headed for the longest weekly winning streak in 14 months after economic growth accelerated in China, the world’s second-biggest crude consumer.
Futures were little changed after advancing the most in two weeks yesterday. China’s gross domestic product rose 7.9 percent in the fourth quarter from a year earlier, compared with 7.4 percent in the previous period, the National Bureau of Statistics said today in Beijing. It’s the first increase in two years after the government implemented policies to revive domestic demand. Oil gained yesterday as U.S. jobless claims dropped and Algerian forces stormed an energy complex to free workers seized by an al-Qaeda-linked group.
“The market is generally positive about the fact the decline in growth that had been concerning investors a few months ago has been arrested,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The stimulus that’s been done in China has been sufficient to turn that around.”
Crude for February delivery was at $95.60 a barrel, up 11 cents, in electronic trading on the New York Mercantile Exchange at 1:27 p.m. Singapore time. The contract advanced 1.3 percent to $95.49 yesterday. That’s the biggest gain since Jan. 2 and the highest close since Sept. 17. Prices are up 2.2 percent this week for a sixth straight advance, the longest winning streak since November 2011.
Brent for March settlement rose 16 cents to $111.26 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark contract was at a premium of $15.18 to West Texas Intermediate futures for the same month. The gap was $15.16 yesterday, the narrowest since July 24.
China Processing
China’s oil processing rose 3.7 percent last year to 467.9 million metric tons, the National Bureau of Statistics said in a report today. Refining in December increased 8.4 percent from a year ago to a record 10.2 million barrels a day, beating the previous high in November.
“China’s underlying demand for oil is on the road to recovery,” said Sijin Cheng, an analyst with Barclays Plc in Singapore. “These very strong headline numbers in November and December are probably a little ahead of where real demand is at the moment, but the overall picture for demand recovery is certainly in place.”
Prices in New York may rise next week on speculation that stronger economic growth will boost fuel demand, a Bloomberg survey showed. Fourteen of 36 analysts and traders, or 39 percent, forecast crude will increase through Jan. 25. Twelve respondents, or 33 percent, predicted a drop. Ten said there would be little change. Last week, 50 percent projected a gain.
Algeria Deaths
Oil gained yesterday on reports that foreign hostages died along with their captors as Algerian forces raided a natural gas plant operated by London-based BP Plc (BP/), Statoil ASA (STL) of Norway and Algeria’s Sonatrach. The killings may threaten production from North Africa’s largest oil and gas industry.
The rally in New York may stall as a technical indicator shows futures have risen too quickly for further gains to be sustainable. The 14-day relative strength index closed yesterday at 71.1, the highest since Feb. 27, according to data compiled by Bloomberg. A reading above 70 signals a market is overbought and will probably decline. The RSI is at 71.4 today.
London-traded Brent will struggle to advance past the combined barrier of a one-year resistance line and a downward- sloping trend channel at $112.82 a barrel, according to technical analysis by Societe Generale SA.
WTI dropped 7.1 percent in 2012 as the U.S. shale boom deepened the glut at Cushing, Oklahoma, the delivery point for WTI and America’s largest storage hub. That left it at an average discount of $17.47 a barrel to Brent last year, compared with a premium of about 7 cents in the five years through 2010. London-traded Brent, the benchmark grade for more than half the world’s crude, climbed 3.5 percent last year.
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
