BLBG:Oil Fluctuates as Japan Contraction Counters China, U.S. Data
Oil in New York fluctuated after its first weekly gain in a month as signs that an improving economic outlook in China and the U.S. countered concern that a contraction in Japan will curb demand.
Futures were little changed after two days of gains. China’s exports increased at the fastest pace in five months in October. Prices pared an earlier advance after Japan said its economy shrank last quarter as overseas sales tumbled and consumer spending slumped. Oil prices are “good,” Saudi Arabian Oil Minister Ali al-Naimi said yesterday.
“China’s export news was encouraging,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “There’s a consensus view that growth seems to be bottoming out and leveling off, maybe even jumping a little bit in response to the stimulus initiatives that the government has so far deployed. That’s an encouraging development for commodities.”
Crude for December delivery rose 14 cents to $86.21 a barrel in electronic trading on the New York Mercantile Exchange at 1:13 p.m. Singapore time. The contract rose 98 cents to $86.07 on Nov. 9, the highest close since Nov. 6. Prices are down 13 percent this year.
Brent for December settlement was at $109.34 a barrel, down 6 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.97 to WTI, compared with $23.33 on Nov. 9.
Saudi Arabia
The situation in the market is “comfortable” and “balanced,” al-Naimi told reporters in Abu Dhabi. Consumers are also happy with the price, he said, adding that the kingdom produced 9.7 million barrels a day in October.
Oil in New York remains in a downtrend channel on the daily chart, signaling last week’s advance may not be sustained, according to data compiled by Bloomberg. Futures have traded between the middle and lower Bollinger Bands for more than seven weeks. These indicators, representing technical resistance and support levels, are about $88.50 and $83 a barrel today.
Japan’s gross domestic product fell an annualized 3.5 percent in the three months through September, after a revised 0.3 percent gain the previous quarter, the Cabinet Office said in Tokyo today. The median of 23 estimates in a Bloomberg News survey was for a 3.4 percent drop.
China Exports
China’s overseas shipments increased 11.6 percent from a year earlier, the Beijing-based customs administration said Nov. 10. That compared with the 10 percent estimate in a Bloomberg News survey of economists and was the fastest rate since May. Industrial production rose 9.6 percent in October from a year earlier, the National Bureau of Statistics said Nov. 9.
China is the world’s biggest oil user after the U.S, where the Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to 84.9, the fourth straight increase and the highest since July 2007, from 82.6 in October.
Hedge funds trimmed bullish bets on crude to the lowest in more than two years as demand fell in the wake of Hurricane Sandy, production increased to the highest since 1994 and U.S. President Barack Obama won re-election.
Money managers reduced net-long positions, or wagers on rising prices, to 122,309 futures and options combined in the seven days ended Nov. 6, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Nov. 9. It was the least amount since the week ended Sept. 28, 2010.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
