BLBG:Oil Trades Near 2-Day High as Economy Lifts U.S. Demand Outlook
Oil traded near the highest price in two days in New York as investors speculated fuel demand may increase amid signs the U.S. economy is strengthening.
Futures were little changed after advancing 0.4 percent yesterday as Commerce Department data showed retail sales in the U.S., the world’s largest oil consumer, rose the most in five months. The Federal Reserve lifted its assessment of the economy and said most of the country’s biggest banks passed stress tests. Crude stockpiles probably climbed last week to the highest in six months, according to a Bloomberg News survey before an Energy Department report today.
“I can’t see any negative bits and pieces out there at the moment that will really stop oil trading back to the top end” of a range of $104 to $110 a barrel in New York, said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “Inventories continue to rise and that might put a cap on prices.”
Crude for April delivery was at $106.83 a barrel, up 12 cents, in electronic trading on the New York Mercantile Exchange at 12:44 p.m. Singapore time. The contract yesterday increased 37 cents to $106.71 a barrel, the highest settlement since March 9. Prices have gained 8.1 percent this year.
Brent oil for April settlement on the London-based ICE Futures Europe exchange slid 1 cent to $126.21. The more actively traded May contract was down 1 cent at $125.66. The European benchmark crude was at a premium of $19.38 to New York futures. The gap yesterday was $19.51, the widest based on closing prices since Oct. 24.
Chart Triangle
Oil in New York has technical support around $106 a barrel today, according to data compiled by Bloomberg. On the daily chart, that’s the bottom of a symmetrical triangle going back more than two weeks. The top of the triangle, representing chart resistance, is about $107.67 today. Investors tend to buy contracts when prices break upward from a triangle pattern or sell when support is breached.
U.S. retail sales climbed 1.1 percent in February after a 0.6 percent gain in January that was more than initially estimated, the Commerce Department said. The Federal Reserve said 15 of the nation’s 19 largest banks could maintain adequate capital levels even in a severe recession that assumes they keep paying dividends and buying back stock.
The Federal Reserve also said in a separate statement it expects “moderate” economic growth as the labor market gathers strength. In its last statement in January, the central bank said growth would be “modest.” The Dow Jones Industrial Average stock index rose to the highest level since 2007.
Fuel Stockpiles
U.S. crude inventories probably increased 1.6 million in the week ended March 9, according to the median estimate of nine analysts surveyed by Bloomberg News. Yesterday, the industry- funded American Petroleum Institute said supplies climbed 2.8 million barrels to 349.3 million.
Gasoline stockpiles fell 1 million barrels, after dropping the previous three weeks, the survey showed. The API said inventories of the motor fuel dropped 2.1 million barrels to 226.3 million, the lowest in six weeks.
The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. in Washington.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net
