BLBG: WTI Crude Rebounds After Biggest Drop in Six Months
West Texas Intermediate crude rose after its biggest weekly drop in six months. Brent oil’s premium to the New York futures widened from the smallest level since June as militants and government forces clashed in Nigeria.
Prices gained as much as 1.1 percent after tumbling 4.7 percent last week, the biggest drop since the period ended Sept. 21. Equities climbed as industrial production in Germany, Europe’s biggest economy, increased more than forecast. The main rebel group in Nigeria, Africa’s largest crude-producing country, said it killed 15 security personnel in an attack in the southern oil-producing Bayelsa state.
“We’re looking at investors across the board taking advantage of last week’s pullback as a buying opportunity,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Specific to the crude market, we’re following the situation in Nigeria, which is having a bigger impact on Brent.”
WTI crude oil for May delivery advanced 41 cents, or 0.4 percent, to $93.11 a barrel at 9:31 a.m. on the New York Mercantile Exchange. The volume of all WTI futures traded was 31 percent below the 100-day average. The contract slid 56 cents to $92.70 on April 5, the lowest close since March 21.
Brent oil for May settlement rose 72 cents, or 0.7 percent, to $104.84 a barrel on the London-based ICE Futures Europe exchange. The contract slumped 2.1 percent to $104.12 on April 5, the lowest settlement since July 24. The volume of all Brent futures was 37 percent higher than the 100-day average.
Brent Premium
The European benchmark grade traded at a premium of $11.73 to WTI. It closed at $11.42 on April 5, the narrowest gap since June 22, on a closing basis.
Brent futures for May settlement traded at a discount of 7 cents to the June contract, a situation known as a contango market, where prompt supplies cost less than those for later delivery. Front-month prices fell below second-month prices for the first time since June 2012 on April 5.
Oil in New York has technical support along its 100-day moving average, about $92.14 a barrel today, according to data compiled by Bloomberg. Futures halted an intraday decline near that indicator for a second day on April 5. Buy orders tend to be clustered close to chart-support levels.
“We really have seen the bottom in the oil price after the recent selloff,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.
German Output
German industrial output rebounded in February, adding to signs that the country is stabilizing after a contraction in the fourth quarter. Production rose 0.5 percent from January, when it contracted 0.6 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.3 percent gain, according to the median of 41 estimates in a Bloomberg survey.
European stocks rose after posting the biggest weekly drop since November. The Standard & Poor’s 500 Index was little changed at 9:31 a.m.
Nigeria’s Movement for the Emancipation of the Niger Delta said on April 3 it would resume attacks in the country after its suspected leader, Henry Okah, was sentenced to 24 years in prison in South Africa on terrorism charges. Okah denies being a leader of the group.
Attacks including kidnappings and bombings of installations by groups such as MEND reduced Nigeria’s oil output by more than 28 percent between 2006 and 2009, according to data compiled by Bloomberg. Violence declined after thousands of fighters accepted a government amnesty offer in 2009.
Iran Talks
Iran and a group consisting of the U.S., Britain, France, China, Russia and Germany failed to reach an interim deal on the Gulf nation’s nuclear work during negotiations in Almaty, Kazakhstan, that ended on April 6. This may mean more pressure for additional sanctions on the fifth-biggest producer in the Organization of Petroleum Exporting Countries.
Norwegian unions and employers reached an agreement in collective bargaining talks that extended beyond a midnight deadline, averting a strike that would have started today and curbed offshore oil production for the second time in less than a year.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
