BLBG:Oil Rises Fourth Day as Jobless Claims Decline, Leading Indicators Gain
Oil rose for a fourth day as applications for unemployment benefits in the U.S. decreased to a three-year low and the index of U.S. leading indicators signaled that economic growth will accelerate.
Futures advanced 0.9 percent after reports that jobless claims dropped by 4,000 to 364,000 last week and leading indicators climbed more than forecast in November. U.S. oil supplies fell the most in a decade last week, the Energy Department said yesterday.
“We’re in an up trend and may have further to go,” said Tom Bentz, a director in New York with BNP Paribas Prime Brokerage Inc. “The inventory number yesterday surprised a lot of people and added to the rally. The jobless numbers today gave us an initial boost but we ran into resistance around $100.”
Crude oil for February delivery increased 86 cents to $99.53 a barrel on the New York Mercantile Exchange, the highest settlement since Dec. 13. Prices have advanced 8.9 percent in 2011 after climbing 15 percent in 2010.
Brent oil for February settlement rose 18 cents to $107.89 a barrel on the London-based ICE Futures Europe exchange. The European contract’s premium to Nymex crude narrowed to $8.36 a barrel today, the smallest differential since March 8. The spread surged to a record high of $27.88 on Oct. 14.
The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after a 0.9 percent October increase, the New York-based research group said today. The median forecast of 54 economists surveyed by Bloomberg News projected the gauge would advance 0.3 percent.
Consumer Confidence
The Thomson Reuters/University of Michigan final index of consumer sentiment increased to 69.9 in December from 64.1 at the end of the previous month. The median estimate of economists surveyed by Bloomberg News called for a reading of 68. This month’s preliminary reading was 67.7.
“The U.S. economy is actually looking OK,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Sentiment has turned bullish as the year comes to an end.”
U.S. crude oil stockpiles fell 10.6 million barrels last week, the largest decrease since February 2001, yesterday’s Energy Department report showed. Imports dropped to 7.58 million barrels a day, the lowest level since September 2008.
“We’ve got a lot of momentum here,” said Chris Dillman, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We still have to see if the market will be able to break through $100.”
Decreasing Volume
Oil touched $100.05 at 1:32 p.m. before dropping back on one of the year’s slowest trading days. Volume on the Nymex totaled 252,037 contracts as of 3:28 p.m. Volume was 409,324 yesterday, the lowest level of the month and down more than half from Dec. 13. Open interest was 1.3 million contracts.
“We’ve had some strong economic numbers and equities are in the midst of a nice three-day pop,” said Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania. “The main reason for this rally is that we’re approaching the end of the year and there’s no liquidity. The path of least resistance is up.”
The Standard & Poor’s 500 Index (SPX) rose 0.8 percent, the third straight gain and the fifth in six days.
New York oil will average $100 a barrel next year as the U.S. averts recession, while Brent will decline from the 2011 mean, according to a Bloomberg News survey of analysts.
The forecast for West Texas Intermediate oil, the U.S. benchmark, is based on the median of 27 analyst estimates compiled by Bloomberg, topping the all-time high of $99.75 set in 2008. WTI is on course to average $95 a barrel in 2011. Brent will average $109 next year, versus $110.98 so far this year.
Iranian Sanctions
Oil is up 26 percent this quarter, the biggest gain since the second quarter of 2009, as the European Union and the U.S. seek support from the Middle East and Asia for sanctions against Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries.
EU nations, the U.S. and Asia-Pacific allies discussed possible measures in Rome on Dec. 20 and vowed to increase pressure on Iran to abandon a suspected nuclear weapons program, according to an Italian Foreign Ministry statement.
Iran’s navy will hold 10 days of maneuvers east of the Strait of Hormuz, state-run Fars news agency reported today, citing Navy Commander Habibollah Sayari. About 15.5 million barrels of oil a day flows through the waterway between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department.
Civilians were targeted in bombings across Baghdad that killed 57 people amid an escalation of political infighting in Iraq that has followed the withdrawal of U.S. troops from the country. U.S. troops from the country. Today’s attacks also injured 176, Ziad Tariq, a spokesman for the Health Ministry, said by phone from the city.
“The upsurge in violence in Iraq is probably adding to the oil price,” Lynch said. “Chances are that there will be no impact on the oil industry, but the increase in violence does add to a perception of instability.”
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
