BLBG:Crude Oil Trades Near Highest Since July on Economy; WTI Holds Below $100
Oil traded near the highest level in more than three months as Japan reported its first economic growth in a year and Italy started building a new government that may help contain the European debt crisis.
West Texas Intermediate oil was little changed after rising to $99.69 a barrel, the highest level since July 26. The economy in Japan, Asia’s second-biggest oil user, expanded at an annualized 6 percent rate last quarter, the Cabinet Office said today in Tokyo. Italy’s president offered Mario Monti, a former EU competition commissioner, the post of prime minister. Oil’s relative strength index was near the highest since April.
“There is some easing of concern over Europe,” said Ken Hasegawa, a commodity-derivatives trading manager at Newedge Group in Tokyo. “The move from $95 to near the $100 level currently is purely technical trading. Expect some profit taking to take place soon.”
Crude for December delivery was at $99.10 a barrel, up 11 cents, in electronic trading on the New York Mercantile Exchange at 11:09 a.m. Singapore time. Prices rose 5 percent last week and have increased for six consecutive weeks, the longest run of gains since April 2009.
Brent oil for December settlement gained 27 cents to $114.43 a barrel on the London-based ICE Futures Europe exchange. The more active January contract was up 29 cents at $113.22. December futures, which expire tomorrow, traded at a premium of $15.33 to New York crude, compared with a record $27.88 on Oct. 14. The spread narrowed 14 percent last week.
Technical Resistance
Oil’s rally in New York may stall as the 14-day relative strength index approaches 70. The technical indicator was at 69.1 today, the highest since April 8, according to data compiled by Bloomberg. A reading of 70 indicates prices may have risen too quickly and further gains aren’t sustainable.
“There’s tough resistance at $100 a barrel,” Jonathan Barratt, a managing director of Commodity Broking Services Pty, said in Sydney. “I would think $100 would hold it, but then back to $95.”
Crude markets are in balance and not over-supplied, ministers from OPEC-member nations Algeria, Iran and Nigeria said yesterday. The Organization of Petroleum Exporting Countries will meet in Vienna on Dec. 14 to decide whether to cut output as Libyan crude production recovers from disruptions because of the rebellion this year against former leader Muammar Qaddafi.
Libya, Saudi Arabia
Libya, holder of Africa’s largest oil reserves, will pump as much as 800,000 barrels a day by the end of this year, the chairman of state-run National Oil Corp., Nuri Berruien, said yesterday in an interview in Doha. The country produced almost 1.6 million barrels a day in January, before protests against Qaddafi began.
Oil has also gained amid signs of rising political tension in the Middle East. Saudi Arabia, the world’s biggest oil exporter, plans to “rebuild and modernize” its armed forces as it confronts regional risks, military Chief of Staff Gen. Hussein al-Qubail said yesterday, according to the official Saudi Press Agency.
Iran, OPEC’s second-biggest oil producer, continued working on nuclear weapons at least until last year, United Nations inspectors said in a report Nov. 8. Iran’s President Mahmoud Ahmadinejad said Nov. 9 that the nation won’t withdraw “an iota” from its atomic program.
Syrian Suspension
Syria called for an emergency Arab League summit after the organization suspended the country, the official Syrian Arab News Agency reported, citing an unidentified government official. President Bashar al-Assad’s government has continued its crackdown against demonstrators, killing 28 protesters yesterday, according to Al Jazeera television.
Japan’s economic expansion beat the median forecast of 5.9 percent by analysts in a Bloomberg survey. The return to growth after three quarters of contraction was driven by companies including Toyota Motor Corp. making up for lost output from the earthquake in March.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
