BLBG:Crude Oil Poised for Quarterly Gain Before U.S. Spending Report
Oil headed for the biggest quarterly gain this year before a report forecast to show personal spending rose in the U.S., signaling an economic recovery that may boost fuel demand.
Futures were little changed after increasing 2.1 percent yesterday, the most in eight weeks. U.S. household purchases probably climbed 0.5 percent last month, up from 0.4 percent in July, according to a Bloomberg survey before Commerce Department data today. Oil surged yesterday as Spain pledged to cut its deficit to ease Europe’s debt crisis. Prices erased a 0.9 percent gain today as the dollar rebounded against the euro.
“Things are looking more positive with Spain, but we are not out of the woods yet,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, who expects Brent crude to average $105 to $110 a barrel in the fourth quarter. “I think the rally we are seeing will run out of steam as the fundamental factors don’t stack up.”
Crude for November delivery on the New York Mercantile Exchange traded at $91.78 a barrel, down 7 cents, at 12:09 p.m. London time. The contract earlier gained as much as 86 cents to $92.71 a barrel and climbed $1.87 to $91.85 yesterday. Prices are up 8 percent this quarter and down 4.9 percent this month.
Brent oil for November settlement rose 37 cents to $112.38 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $20.60 a barrel after closing at $20.16 yesterday.
Bollinger Band
New York crude rebounded yesterday from technical support along its lower Bollinger Band. Buy orders tend to be clustered near chart-support levels. The band is at about $89.55 today.
Spanish Prime Minister Mariano Rajoy’s government announced its fifth austerity package to shrink the euro area’s third- biggest budget deficit. French President Francois Hollande will today present his government’s spending plan after pledging to raise taxes to cut the deficit. The European Union used 16 percent of the world’s oil last year, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. accounted for 21 percent.
“We’re seeing a better demand scenario,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “The market is slowly coming around to the view that Europe, while it still could be a drag on global growth, is unlikely to implode. That dip below $90 hit key support.”
‘Red Lines’
Oil also rose after Israeli Prime Minister Benjamin Netanyahu told the United Nations the world must impose “red lines” on Iran’s uranium enrichment program to prevent it from attaining nuclear weapons. OPEC’s third-biggest crude producer may be able to build an atomic weapon by next year, Netanyahu told the UN General Assembly yesterday.
The U.S. and the European Union imposed new sanctions on Iran’s energy exports in July aimed at coercing it to slow its enrichment program. Israel’s Defense Minister Ehud Barak has said his country may feel compelled to strike the facilities as early as this fall. Iran, which says its nuclear work is for peaceful civilian purposes, has vowed to retaliate if attacked.
Gasoline rose to the highest level in a month on concern that refinery shutdowns in the Atlantic Basin will further reduce stockpiles on the U.S. East Coast. Futures for October delivery rose as much as 1.07 cent, or 0.3 percent, to $3.155 a gallon on the New York Mercantile Exchange today. Prices settled at $3.1443 yesterday, the highest since Aug. 27.
Refinery Maintenance
Royal Dutch Shell Plc (RDSA)’s 400,000 barrel-a-day Pernis plant in the Netherlands is conducting maintenance until November. Supplies on the U.S. East Coast, including New York Harbor, the delivery point for futures contracts, were the lowest since October 2008 last week, Energy Department data show.
Crude may decline in New York next week, according to a Bloomberg survey of analysts. Thirteen of 28 respondents, or 46 percent, forecast crude will decrease through Oct. 5. Ten analysts, or 36 percent, predicted that futures will gain and five said there will be little change in prices.
The oil market is well supplied and there’s no scarcity, according to the Secretary-General of the Organization of Petroleum Exporting Countries.
OPEC’s spare production capacity “remains at relatively comfortable levels and total commercial stock levels are healthy,” Abdalla El-Badri said today in a speech in Berlin. “It is clear, the market is currently well supplied. Supply and demand fundamentals point to a stable market. We see no shortages.”
The organization will curb crude shipments into next month as demand from China declines and refiners carry out maintenance, tanker-tracker Oil Movements said yesterday in its weekly e-mailed report. OPEC will export 23.66 million barrels a day in the four weeks to Oct. 13, down 1.2 percent from 23.95 million a month earlier, it said.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Rupert Rowling in London at rrowling@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
