BLBG:Oil Rebounds From Four-Month Low After Biggest Decline This Year
Oil rebounded from the lowest level in almost four months on speculation the biggest decline this year was exaggerated amid signs of increased demand in Asia.
Futures climbed as much as 0.7 percent in New York. Prices slumped 4.8 percent yesterday after U.S. oil stockpiles rose and fuel demand dropped, while President Barack Obama’s re-election stoked speculation there will be a budget showdown. China, the second-biggest crude user after the U.S., may boost demand the most in two years this quarter, according to Sanford C. Bernstein & Co. and the International Energy Agency.
“It’s probably a bit of a balancing act between the demand that we’ve seen coming out of the U.S. and Europe and the demand growth we’ve seen over time in Asia,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “We saw the inventory numbers coming out of the U.S. and they certainly weren’t flash.”
West Texas Intermediate oil for December rose as much as 56 cents to $85 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.97 at 12:42 p.m. in Singapore. Crude slumped $4.27 yesterday to $84.44, its lowest close since July 10. Prices have fallen 14 percent this year.
Brent for December settlement advanced 64 cents to $107.46 a barrel on the ICE Futures Europe exchange. It slid $4.25, or 3.8 percent, to $106.82 yesterday. The European crude, a benchmark grade for more than half the world’s oil, was at a premium of $22.49 to New York-traded WTI, the most in more than a week.
China Demand
Crude in New York is rebounding after reaching technical support along the lower Bollinger Band on the daily chart, according to data compiled by Bloomberg. Futures have pared losses after reaching this indicator, at $83.21 a barrel today, for the past two weeks. Buy orders tend to be clustered near chart-support levels.
China’s apparent oil demand, or domestic production plus net imports, will jump at least 400,000 barrels a day in the three months ending Dec. 31 from the previous quarter, according to the IEA and Bernstein. The increase would be the biggest since the final quarter of 2010 and compares with estimated net global growth of 290,000, IEA data show.
U.S. crude stockpiles increased 1.77 million barrels to 374.8 million barrels last week, the Energy Department said yesterday. They were forecast to advance 2 million barrels, according to the median of 11 analyst estimates in a Bloomberg survey.
Fiscal Cliff
Gasoline supplies rose 2.88 million barrels to 202.4 million, the highest level since the week ended Aug. 17, the report showed. Inventories of distillate fuel, a category that includes diesel and heating oil, increased 131,000 barrels to 118.1 million, the first gain in eight weeks.
Obama, a Democrat, faces a battle with the Republican- controlled House over about $607 billion of tax increases and federal spending cuts that are set to kick in automatically in the U.S. in January as part of last year’s debt negotiations.
The Congressional Budget Office has said the U.S. economy will contract by as much as 0.5 percent next year if Congress fails to stop the measures known as the “fiscal cliff” from taking effect.
To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
