BLBG:Oil Trades Near Four-Month High Before Vote on U.S. Debt Ceiling
Oil traded near the highest price in four months in New York on speculation that the U.S. will lift its debt limit, countering forecasts that stockpiles increased in the world’s largest crude consumer.
March futures were little changed after gaining 0.7 percent yesterday as President Barack Obama’s administration said it welcomes a move by House Republicans to vote today on lifting the debt ceiling through mid-May. U.S. crude stockpiles probably rose last week, according to a Bloomberg News survey before a government report tomorrow. Deutsche Bank AG raised its growth forecast for oil demand in China.
“There is optimism that the U.S. will agree to lift the debt limit at this critical time point,” Shi Yan, an oil analyst with UOB-Kay Hian Ltd. (UOBK), said by telephone from Shanghai. “The global economy is recovering, including the U.S., which support crude prices.”
West Texas Intermediate crude for March delivery was at $96.55 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 4:04 p.m. Singapore time. The average volume of all futures traded was 15 percent above the 100-day average. The February contract expired yesterday at $96.24, the highest close since Sept. 17, 2012.
Brent for March settlement was at $112.32 a barrel, down 10 cents, on the London-based ICE Futures Europe exchange. The volume of futures exchanged was 28 percent higher than the 100- day average. The European benchmark contract traded at a premium of $15.77 to WTI. The gap was $15.16 on Jan. 17, the narrowest in almost six months.
U.S. Pipeline Capacity
Brent’s premium to WTI will be in a range of $15 to $19 a barrel in the first quarter before falling to about $6 to $12 a barrel in the fourth quarter as new pipeline capacity begins to affect supplies at Cushing, Oklahoma, Hussein Allidina, an analyst at Morgan Stanley (MS), said today in a report.
Oil’s rise in New York is stalling as a technical indicator shows futures have climbed too quickly for further gains to be sustainable. The 14-day relative strength index is higher than 70 for a fourth day today, according to data compiled by Bloomberg. A reading above that level signals a market is overbought and will probably decline.
U.S. crude stockpiles probably rose by 2.5 million barrels to 362.8 million in the seven days ended Jan. 18, according to the median of seven analyst estimates before a report from the Energy Department. All respondents forecast a gain.
U.S. gasoline stockpiles probably rose by 1.5 million barrels, and distillate supplies, a category that includes heating oil and diesel, increased 500,000 barrels, according to the survey.
Chinese Demand
The government data is being released a day later than usual because of the Martin Luther King Jr. Day holiday on Jan. 21 in the U.S. The industry-funded American Petroleum Institute is scheduled to release separate inventory figures today.
In China, oil demand will increase by 4.9 percent this year, equivalent to about 468,000 barrels a day, amid planned investments in new infrastructure, Soozhana Choi, Deutsche Bank AG’s chief oil strategist in Singapore, wrote in a report today.
Oil prices increased yesterday after Germany’s ZEW Center said its index, which aims to predict economic developments six months in advance, jumped to 31.5 from 6.9 in December. Economists forecast an increase to 12, the median of 39 estimates in a Bloomberg News survey show.
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
