BLBG: Oil Rebounds From One-Week Low on Outlook for U.S. Demand
Oil increased, halting this week’s drop, on speculation that fuel demand will climb with the economic rebound in the U.S., the world’s biggest crude- consuming country.
Futures in New York gained as much as 0.8 percent before a report that may show U.S. consumer confidence rose to a one-year high. Crude climbed to the day’s high and the dollar dropped after government data showed that consumer prices, excluding food and energy costs, rose a smaller-than-forecast 0.1 percent last month.
“We will focus on the improving U.S. economy, which should result in better U.S. demand,” said Phil Flynn, an analyst at PFGBest in Chicago. “The consumer prices were a relief. There were fears that the core rate would be higher, forcing the Fed to raise rates earlier than planned to stop inflation.”
Crude for April delivery rose 62 cents, or 0.6 percent, to $105.73 a barrel at 9:15 a.m. on the New York Mercantile Exchange. Prices are up 7 percent this year. West Texas Intermediate oil, the U.S. benchmark, is down 1.6 percent this week.
Brent oil for May settlement increased $1.35, or 1.1 percent, to $123.95 a barrel on the London-based ICE Futures Europe exchange.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment is expected to rise to 76 from 75.3 in February, according to the average of 70 economist estimates in a Bloomberg News survey.
Industrial Output
Industrial output at factories, mines and utilities in the U.S. was unchanged in February, below the 0.4 percent increase that was the median estimate of 80 economists surveyed by Bloomberg News before a report today. January’s output was revised to an increase of 0.4 percent from little changed.
“The U.S. recovery is coming along better than expected,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “But as far as U.S. demand is concerned, we are yet to see improvements ahead of the summer driving season.”
The so-called core measure of consumer prices climbed 0.1 percent in February, less than the 0.2 percent projected by 79 analysts surveyed by Bloomberg News, the Labor Department reported today in Washington. The consumer-price index climbed 0.4 percent, matching the median forecast in the survey.
The euro rose as much as 0.5 percent against the dollar after the release of the inflation report. A stronger euro and weaker dollar boost oil’s appeal as an investment alternative.
’Talk Market Down’
U.K. Prime Minister David Cameron said yesterday in New York there is no agreement with U.S. President Barack Obama on using strategic reserves to reduce prices. Jay Carney, the White House press secretary, reiterated that no agreement was reached.
“The U.S. and the U.K. are trying to talk the market down and avoid gasoline prices going toward $4” a gallon, Johannes Benigni, managing director of consultant JBC Energy GmbH, said today in a Bloomberg Television interview in Singapore.
The national average retail price of unleaded regular gasoline in the U.S. climbed to $3.831 a gallon yesterday, according to a daily survey by AAA, the country’s largest motoring organization.
Sanctions against Iran, which have helped lift oil prices this year, were strengthened yesterday. The leading worldwide financial messaging service for international money transfers said it will stop providing services to Iranian banks subject to EU sanctions. Iran’s central bank is included in the list. The Persian Gulf country is being targeted to discourage its nuclear program, which the U.S. and EU allege is producing weapons.
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
