BLBG: Oil Rises in New York as U.S. Retail Sales Climb the Most in Four Months
Oil advanced after U.S. retail sales climbed in July by the most in four months, signaling that spending in the world’s biggest crude-consuming country is holding up.
Futures rose as much as 1.9 percent as the Commerce Department said spending increased 0.5 percent, following a 0.3 percent gain in June that was larger than previously estimated. France, Spain, Italy and Belgium banned short-sales to reverse the fall in financial stocks.
“The retail sales numbers were really good, especially the upward revision of the June number,” said Carl Larry, director of energy derivatives and research with Blue Ocean LLC in New York. “People are even feeling a bit better about the situation in Europe and expect governments to take action to help their banks like we did.”
Crude oil for September delivery climbed 97 cents, or 1.1 percent, to $86.69 a barrel at 12:04 p.m. on the New York Mercantile Exchange. The contract is down 19 cents this week after ranging from $75.71 to $87.37.
Brent oil for September settlement rose 50 cents, or 0.5 percent, to $108.52 a barrel on the London-based ICE Futures Europe. The European benchmark was at a premium of $21.83 to U.S. futures, down from an intraday record $25.54 yesterday.
U.S. retail sales, excluding automobiles and service stations, climbed 0.3 percent after a 0.5 percent gain in June that was larger than previously estimated.
The Standard & Poor’s 500 Index rose 1.2 percent to 1,187.05 and the Dow Jones Industrial Average increased 1.7 percent to 11,328.92.
Tropical Weather Outlook
“Oil is following the stock market,” said Daniel Flynn, a broker at PFGBest, a Chicago-based brokerage. “We’re watching out for storms in the Atlantic. You don’t want to go into the weekend short when there’s a good chance we could come in Monday to a tropical storm.”
Two areas of disturbed weather off West Africa have a 40 percent chance of becoming tropical cyclones within two days, the National Hurricane Center said. One disturbance is 1,175 miles (1,880 kilometers) east of the northern Leeward Islands, while the other is 450 miles southwest of the southern Cape Verde Islands, the Miami-based center said at 8 a.m. local time.
Futures retreated from the day’s highs at 9:55 a.m. New York time when a report showed confidence among U.S. consumers plunged in August to the lowest level since May 1980. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month.
Prices dropped as much as 2 percent before floor trading opened at 9 a.m. in New York after France’s economy failed to grow in the second quarter and manufacturing in the euro region unexpectedly declined in June.
French Economy
France’s economy stalled in the second quarter as consumer spending plunged, Paris-based statistics office Insee said today. Gross domestic product was unchanged from the first quarter, when it rose 0.9 percent, the most in four years.
Industrial production in the euro region fell in June, the European Union’s statistics office in Luxembourg said today. The 0.7 percent decline was led by a drop in capital goods such as machinery, adding to signs the economy is losing momentum as governments struggle to contain the debt crisis.
French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to meet next week after French markets were rattled by concern that the euro-area debt crisis will spread. The leaders of Europe’s two largest economies will discuss economic governance of the 17-nation euro region in Paris on Aug. 16, according to separate statements yesterday.
‘The Driving Factor’
“Fear is the driving factor,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, whose forecast for prices in the second quarter was third-closest among 29. “In the last few years things have hardly been worse than they are now. We have extremely low growth from the U.S., a slowdown in China, definitely troubles in the euro zone.”
Oil in New York may gain next week as U.S. stockpiles decline and fuel demand increases, according to a Bloomberg News survey. Twelve of 29 analysts and traders, or 41 percent, forecast crude will increase through Aug. 19. Last week, 51 percent of respondents predicted a decrease.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net
