BLBG:Oil Trades Near One-Week High on Speculation U.S. Economy May Boost Demand
Oil traded near the highest price in a week and headed for the first weekly gain in three amid signs of economic recovery in the U.S., the world’s biggest crude- consuming nation.
Futures were little changed in New York after climbing a second day yesterday. U.S. durable goods orders rose more than forecast in December, according to data from the Commerce Department, while a report this week showed gasoline demand gained the most in more than two months. Australian crude production may have been cut by a quarter as Tropical Cyclone Iggy shuts platforms. Brent oil’s premium to West Texas Intermediate widened a second day.
“The data we’ve seen out of the U.S. over the last few months is indicating a recovery in the economy,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney, said by telephone today. “The spread between Brent and West Texas has blown out again. That suggests the potential for some supply disruption out of the Middle East is in the back of traders’ minds.”
Crude for March delivery was at $99.77 a barrel, up 7 cents, in electronic trading on the New York Mercantile Exchange at 4:22 p.m. Sydney time. The contract yesterday gained 30 cents to $99.70, the highest since Jan. 19. Prices are up 1.3 percent this week and 17 percent higher the past year.
Brent oil for March settlement was at $111.14 a barrel, up 35 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate futures was at $11.37, compared with $9.90 on Jan. 18 and a record $27.88 on Oct. 14.
Technical Support
Oil in New York has technical support along its 50-day moving average, around $99.28 a barrel today, according to data compiled by Bloomberg. Futures slid to an intra-day low yesterday of $99.23. Buy orders tend to be clustered close to chart-support levels.
“West Texas is in a key area between $99 and $102 so if we do see it trade up through $102.50 in the next few sessions we could well get a bit of a gallop on,” McCarthy said.
U.S. bookings for durable goods, or products meant to last at least three years, advanced 3 percent after rising 4.3 percent the prior month, the biggest back-to-back gains in almost a year, according to Commerce Department data released yesterday in Washington. Economists projected a 2 percent increase, according to a Bloomberg News survey.
Fuel consumption increased 7.5 percent to 19.2 million barrels a day in the week ended Jan. 20, the largest increase since Nov. 4, the Energy Department said on Jan. 25.
Iran Sanctions
Oil has also gained this week amid concern European Union sanctions on Iran will curb supplies. EU foreign ministers agreed on Jan. 23 to ban petroleum imports from Iran starting July 1 to pressure the country over its nuclear program. Iranian President Mahmoud Ahmadinejad said his country is willing to revive talks on its nuclear program and accused Western countries of dodging discussions, the state-run Fars news agency reported.
Iran has threatened to close the Strait of Hormuz in retaliation against the embargo. The waterway is a transit route for about a fifth of the world’s crude, according to the U.S. Department of Energy.
More than 70 percent of investors in a quarterly Bloomberg Global Poll said an attack on Iran’s nuclear facilities would create only a short-term disruption in crude markets. Only about a third of the 1,209 global investors, traders and analysts surveyed Jan. 23-24 said an attack could trigger an oil shock leading to a global recession.
Tropical Cyclone Iggy
Crude may rise next week on the embargo plan and after the Federal Reserve committed to keeping interest rates near a record low through 2014, a Bloomberg News survey showed. Fifteen of 32 analysts, or 47 percent, forecast oil will advance through Feb. 3. Ten respondents, or 31 percent, predicted prices will drop and seven estimated there will be little change.
Tropical Cyclone Iggy has reduced Australian output this week by as much as 100,000 barrels a day, or about a quarter of the nation’s average crude production last fiscal year. The storm will strengthen to a category 3 tomorrow, according to the Bureau of Meteorology on its website.
Woodside Petroleum Ltd. stopped output at its Cossack, Wanaea, Lambert and Hermes fields and Apache Corp. shut its Van Gogh operations offshore Australia’s North West Shelf for a second time, the companies said in e-mailed statements today.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
