BLBG:Oil Heads for Longest Run of Weekly Gains Since 2004
Oil headed for the longest run of weekly gains in more than eight years in New York before a report that may show the U.S. added jobs last month, signaling economic recovery in the world’s biggest crude consumer.
West Texas Intermediate, little changed today, is poised for an eighth weekly advance, the most extensive since August 2004. U.S. employers probably added 165,000 workers last month after a 155,000 increase in December, according to a Bloomberg News survey before Labor Department data. Israeli jets hit Syrian trucks carrying anti-aircraft missiles for the Islamic militant group Hezbollah Jan. 29, according to an official who asked not to be named.
“Oil prices have shown some real momentum,” said Michael Poulsen, an analyst at Global Risk Management Ltd., who predicts that geopolitical risk may push the Brent crude in London to $120 a barrel in the next two months. “U.S. unemployment figures, while not improving as fast as hoped for, are definitely pulling things in the right direction.”
Crude for March delivery was at $97.42 a barrel, down 7 cents, in electronic trading on the New York Mercantile Exchange at 9:25 a.m. London time. The volume of all contracts traded was 17 percent higher than the 100-day average. Prices are up 1.6 percent this week, extending three monthly advances.
Brent for March settlement climbed 10 cents to $115.45 a barrel on the London-based ICE Futures Europe exchange. The volume of all contracts traded was 10 percent higher than the 100-day average. The European benchmark grade was at a premium of $18.16 to WTI futures, up from $18.06 yesterday.
Middle East Unrest
Oil in New York may rise next week after the Federal Reserve said this week it will keep buying securities at a rate of $85 billion a month to stimulate economic growth, and amid instability in the Middle East and North Africa, a Bloomberg survey showed. Eighteen of 43 analysts and traders, or 42 percent, forecast crude will increase through Feb. 8. Sixteen respondents, or 37 percent, predicted a decline and nine forecast little change.
Iran told United Nations monitors it’s installing new centrifuges at its Natanz facility that can enrich more uranium in less time, according to a restricted International Atomic Energy Agency document circulated to members Jan. 30. The Islamic republic is under Western sanctions on its oil exports because of its nuclear program.
‘Geopolitical Friction’
“We do expect oil prices to remain sensitive to geopolitical friction this year,” said Barnabas Gan, an analyst for treasury research and strategy at Oversea-Chinese Banking Corp. in Singapore, who forecasts WTI will average $100 a barrel this year. “The main thing on our radar is the Israel friction with Syria, and Iran. If there’s any commotion in that direction, we’ll definitely see oil prices spiking all over again.”
Brent’s advance may stall as “the steep bullish dynamic since 2008 is broken,” according to Societe Generale SA. On the monthly chart, futures are trading close to technical resistance along a downward-sloping trend line connecting the opening prices of July 2008 and May 2011, about $118 a barrel this month, the bank said in a report e-mailed yesterday. Sell orders tend to be clustered near resistance levels.
Crude production by the Organization of Petroleum Exporting Countries declined to a 15-month low in January as Saudi Arabia reduced output because of waning demand from consumers, a Bloomberg survey showed yesterday. Output slipped 525,000 barrels to an average 30.5 million a day from 31 million in December, the survey of oil companies, producers and analysts showed. The December total was revised 430,000 barrels a day lower.
Saudi Output
Saudi Arabia reduced December output because customers asked for less, Ibrahim Al-Muhanna, an adviser to Oil Minister Ali al-Naimi, said Jan. 14. Al-Muhanna denied what he said were suggestions that the nation cut production to push prices higher and accused unidentified media of misinterpreting the kingdom’s response to weaker demand.
A government gauge of manufacturing in China, the second- biggest crude user, unexpectedly declined today, while a similar measure by HSBC Holdings Plc and Markit Economics rose to a two- year high. The nation’s Purchasing Managers’ Index was 50.4 in January, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing. The reading compares with the 51 median estimate in a Bloomberg News survey and 50.6 in December. A figure above 50 indicates expansion.
“The recovery is still at an early stage, so it’s not going to be smooth sailing or a straight line up,” said Selena Ling, the Singapore-based head of treasury research and strategy at OCBC. “China is one of the big crude users, so when Chinese data starts to disappoint the market, people will start to think about what the pace of recovery is.”
HSBC and Markit’s manufacturing PMI climbed to 52.3 in January from 51.5 the prior month. The median estimate in a Bloomberg survey was for 52. HSBC said in a statement that it sees increasing signals of a sustained recovery in growth.
China accounted for 11 percent of the world’s oil consumption in 2011 and the U.S. used 21 percent, according to BP Plc (BP/)’s Statistical Review of World Energy.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
