BLBG:Oil Rebounds After Five-Day Loss on U.S. Outlook, Japan
Oil rebounded after falling for five days in New York, the longest losing streak since May, on speculation that losses were excessive before reports that may show an improvement in the U.S. economy.
Futures gained as much as 1 percent after closing yesterday at the lowest in more than three months. U.S. orders for durable goods probably rose last month, while gross domestic product accelerated in the third quarter, according to Bloomberg surveys. Equities advanced in Europe and Asia as the Nikkei reported the Bank of Japan may boost its asset-purchase plan. The S&P GSCI index of 24 commodities added 0.7 percent as the Dollar Index dropped.
“It’s a rebound, it’s the same on metals, in fact it’s quite the union on commodity prices today,” Bjarne Schieldrop, the Oslo-based head of commodity research at SEB AB, said today by phone. “There has been some positive sentiment coming out of Asia today and also there is the stronger euro versus the weaker dollar that is driving prices up.”
West Texas Intermediate for December delivery rose as much as 89 cents to $86.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $86.22 at 11:27 a.m. London time. The contract settled at $85.73 yesterday, the lowest since July 10.
Brent for December settlement added 79 cents to $108.64 a barrel on the ICE Futures Europe exchange. The contract yesterday declined for a seventh day, the longest losing streak since July 2010. The European benchmark crude was at a premium of $22.42 to WTI, compared with $22.12 yesterday.
Relative Strength
Oil is rebounding in New York after yesterday’s drop sent the relative strength index to the lowest since June 28. Crude climbed from a nine-month low in June when the RSI slid below 30, signaling the market was oversold. Today’s reading is 34.8.
U.S. orders for durable goods rose 7.5 percent last month, according to a Bloomberg survey of 77 economists conducted before today’s report from the Commerce Department. The department may report tomorrow that U.S. gross domestic product grew at a 1.9 percent annual pace in the three months ended Sept. 30, up from 1.3 percent the previous quarter, economists forecasts showed.
“I’m looking at data in the service area in particular that could see some upside surprise to those positive estimates,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “That will be a reminder to all markets, but particularly oil markets, of the much-improved U.S. economic situation.”
Japan Stimulus
Japan’s central bank will consider increasing its asset- purchase program by 10 trillion yen ($125 billion) to 90 trillion yen at an Oct. 30 policy meeting, the Nikkei newspaper reported. The U.S. Federal Reserve yesterday said it will maintain stimulus after last month committing to a third round of bond purchases.
“The price is quite oversold,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “Everybody is positive on the Japanese equity market today from expectations that the Bank of Japan (8301) may ease policies.”
Calgary-based Nexen Inc. (NXY) is resuming operations at the Buzzard field in the North Sea after maintenance took longer than forecast, according to a statement.
The company lowered its fourth-quarter production forecast to 180,000 to 200,000 barrels of oil equivalent a day, partly because of Buzzard. It kept its guidance for annual output of 185,000 to 220,000 barrels a day.
To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net;
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
