BLBG:Oil Gains After Biggest Drop In Two Weeks As Norway Talks Fail
Oil rebounded in New York on speculation the biggest drop in two weeks was excessive after energy companies and labor unions in Norway failed to reach a compromise to prevent a strike from escalating.
Futures advanced as much as 0.7 percent after falling 3.2 percent on July 6, the biggest decline since June 21. Labor action by Norway’s energy workers entered a 15th day yesterday after talks supervised by a state mediator failed. There are no new discussions planned, according to Kristin Bremer Nebben, a spokeswoman for the Norwegian Oil Industry Association. Prices slid last week after a report showed the U.S., the world’s biggest crude user, created fewer jobs than estimated in June.
“I don’t think upward momentum will be that powerful or sustained,” Jarmo Kotilaine, the chief economist at Jeddah- based National Commercial Bank who forecasts Brent crude will trade in a range of $90 to $110 a barrel, said by telephone yesterday. “Norway is an issue.”
West Texas Intermediate oil for August delivery climbed as much as 58 cents to $85.03 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.82 at 1:58 p.m. Singapore time. The contract slid $2.77 on July 6 to close at $84.45, the lowest settlement since July 2. Prices are 14 percent lower this year.
Brent crude for August gained 58 cents, or 0.6 percent, to $98.77 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to WTI was at $13.95, from $13.74 on July 6.
Technical Support
Oil in New York has technical support along the middle Bollinger Band on the daily chart, at around $83.80 a barrel today, according to data compiled by Bloomberg. Futures halted their decline July 6 near that indicator. Buy orders tend to be clustered near chart-support levels.
Norway’s strike, which started June 24, is disrupting as much as 250,000 barrels of oil output a day, according to Statoil ASA (STL), the nation’s largest energy company. Companies and unions met in Oslo after Norway’s government encouraged new talks in an attempt to end the dispute that threatens to halt output from western Europe’s largest crude exporter.
U.S. payrolls rose by 80,000 workers in June, compared with a forecast of 100,000 in a Bloomberg News survey of economists, Labor Department data on July 6 showed. The International Monetary Fund will cut its world-growth estimate for this year, Managing Director Christine Lagarde said the same day.
The economy in China, the second-biggest oil consumer, faces “relatively large” downward pressure, Premier Wen Jiabao said, according to the official Xinhua News Agency yesterday. Japan’s machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said in a report today. The decline is the biggest since comparable data were made available in 2005.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Anthony DiPaola in Dubai at adipaola@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
