BLBG:Oil Rises From Three-Week Low On Forecasts U.S. Hiring Increased
Oil rebounded from the lowest close in almost three weeks in New York amid forecasts that hiring increased in the U.S., the world’s largest consumer of crude.
Futures rose as much as 1.5 percent, trimming a second weekly decline. Employers probably added 100,000 workers in July after an 80,000 gain in June, according to a Bloomberg News survey ahead of government data today. Tropical Storm Ernesto weakened as it moved west into the Caribbean, the U.S. National Hurricane Center said. Oil fell 2 percent yesterday after the European Central Bank failed to assure investors it was ready to take immediate steps to support the economy.
“Oil markets are getting a bit tighter, and demand should be picking up,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG (RBI) in Vienna, who predicts prices in London will struggle to pass $110 a barrel. “Without doubt, the U.S. recovery and the Chinese economy are the two most important factors on the demand side, more so than Europe.”
Crude for September delivery increased as much as $1.26 a barrel to $88.39 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.06 at 12:33 p.m. London time. The contract yesterday fell $1.78 to $87.13, the lowest close since July 13. Prices are 2.3 percent lower this week and down 11 percent this year.
Brent crude for September settlement gained 49 cents, or 0.5 percent, to $106.39 a barrel on the London-based ICE Futures Europe exchange.
Brent-WTI Spread
The European benchmark’s premium to New York-traded West Texas Intermediate was at $18.33, after closing yesterday at $18.77, the most since May 16.
The “compelling reason for the widening spread” is Brent’s strength rather than WTI’s weakness, according to JBC Energy GmbH. A drop in the output of North Sea Brent crude stemming from maintenance work at the Buzzard oil field is boosting the differential, the Vienna-based researcher said in a report today. Previous surges in the spread were caused by a build-up of inventories in the U.S., JBC said.
Crude shipments from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, have plunged by 1.2 million barrels a day, or 52 percent, since the latest sanctions aimed at dissuading the country’s nuclear program began July 1, according to data compiled by Bloomberg.
Catherine Ashton, the European Union foreign-policy chief, spoke with Iran’s top nuclear negotiator and failed to set a specific date for the next round of talks aimed at pressuring the country to give up elements of its nuclear program. The two officials agreed to talk again “after further reflection at the end of the month,” according to an e-mailed statement yesterday from Ashton’s office.
Nigeria Production
Crude oil output in Nigeria, Africa’s biggest producer, reached an “all-time high” after security improved in the southern oil-producing Niger River delta region, Andrew Yakubu, group managing director of the Nigerian National Petroleum Corp., said by e-mail. Total production rose yesterday to 2.7 million barrels a day from 2.4 million barrels, he said.
Oil in New York has technical resistance around $90 a barrel, along a downward-sloping trend line on the daily chart going back three months, according to data compiled by Bloomberg. Price advances the past two weeks have stalled near this line. Sell orders tend to be clustered near chart- resistance levels.
“Near term, market attention will next shift to the last of the week’s event risks, namely U.S. non-farm payrolls,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd. (ANZ) in Melbourne, said in a note today.
Storm Track
Ernesto, the fifth named weather system of the Atlantic season, weakened as it moved west past Barbados into the eastern Caribbean, the National Hurricane Center said.
Ernesto had top winds of 45 miles (75 kilometers) per hour, down from 50 mph earlier, the hurricane center said in a 5 a.m. Atlantic time advisory. The storm was 30 miles southeast of St. Lucia moving west at 24 mph. The government of Barbados discontinued a tropical storm warning for the islands.
It’s too early to say if the storm’s track will lead it into the Gulf of Mexico. The Gulf is home to 6.5 percent of U.S. natural gas output, 29 percent of oil production and 40 percent of refining capacity, according to the Energy Department. In June, Tropical Storm Debby’s threat to the Gulf pushed New York natural gas futures to a one-month high as about 35 percent of the region’s output was shut.
Analysts and traders surveyed by Bloomberg News were split over the direction of oil prices next week after central banks failed to bolster stimulus and Tropical Storm Ernesto developed. Thirteen of 33 forecasters, or 39 percent, estimated crude will drop through Aug. 10. Another 13 respondents predicted that futures will increase and seven said there will be little change.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
