BLBG:Oil Rises First Time in Three Days; Brent Gap Widest in Year
Oil rose in New York for the first time in three days, rebounding from a decline that sent the U.S. benchmark grade to the biggest discount versus European futures in almost a year.
West Texas Intermediate crude gained as much as 1.1 percent after sliding 2.6 percent in the prior two days and reaching technical-support levels. The contract’s discount to London- traded Brent oil widened to $22.49 yesterday, the largest gap since Oct. 20, 2011. The U.S. Energy Department is scheduled to release its weekly report on production and stockpiles Oct. 11.
“WTI was the most oversold, so technically speaking, it would bounce more than Brent,” said Gordon Kwan, head of energy research at Mirae Asset Securities Ltd. in Hong Kong. “It’s more like a dead-cat bounce until we seriously get into the winter heating oil season, which doesn’t begin until Dec. 1.”
Crude for November delivery climbed as much as $1 to $90.33 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.15 at 12:49 p.m. Singapore time. The contract dropped 55 cents to $89.33 on Oct. 8, the lowest close since Oct. 3. Prices are down 8.8 percent this year.
Brent oil for November settlement gained 83 cents, or 0.7 percent, to $112.65 a barrel on the London-based ICE Futures Europe exchange. Prices are up 4.9 percent this year. Its premium to WTI was unchanged at $22.49.
Brent-WTI Spread
Brent’s premium to WTI may widen to $30 a barrel by December as refineries consume less crude as they shut for maintenance before the U.S. winter, said Kwan. European futures are also getting support from Middle East turmoil, with Turkey deploying additional tanks and missile defense systems on the Syrian border yesterday as artillery units responded to fire from President Bashar al-Assad’s armed forces.
“The spread may blow out to $30 a barrel because U.S. oil demand seasonally will weaken as we go into the shoulder season” that separates summer and winter, Kwan said. “Brent is being boosted by increasing political tensions between Turkey and Syria, which could jeopardize stability and supplies in the Middle East.”
Tension between the two countries has risen with the 19- month rebellion against Assad’s government, with Turkey voicing support for the rebels.
Bollinger Band
Oil is rising in New York after rebounding yesterday from its lower Bollinger Band for a second day, signaling technical support, according to data compiled by Bloomberg. Buy orders tend to be clustered near chart-support levels. Crude’s 30-day stochastic oscillators have been below 30, a reading that indicates futures have fallen too far for further losses to be sustained.
“Often these things feed on themselves a bit,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “People are on the sidelines waiting to take action and when the market starts to move, it brings them in. There does appear to be a risk-on movement generally.”
U.S. crude stockpiles probably rose 1.5 million barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg News before the Energy Department report. That would be the first gain in three weeks.
Gasoline supplies and distillate inventories, a category that includes heating oil and diesel, probably each increased by 500,000 barrels, according to the survey.
The American Petroleum Institute will release separate stockpile data tomorrow. The API collects inventory information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
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
