BLBG:Oil Trades Near Two-Day High After Israel, Hamas Cease-Fire
Crude futures traded near the highest level in two days in New York amid concern that a cease- fire between Israel and Hamas may not hold, putting at risk supply from the Middle East.
West Texas Intermediate was little changed after rising as much as 0.5 percent. A cease-fire crafted yesterday by Egypt and the U.S. halted eight days of aerial assaults that ravaged the Gaza Strip and made Tel Aviv a missile target. Floor trading in New York is closed today because of the Thanksgiving holiday. A Chinese manufacturing index signaled the first expansion in 13 months.
“Oil is holding its own as people are quite skeptical the Gaza cease-fire will last,” Filip Petersson, a commodities strategist at SEB AB in Stockholm, said by phone. “There might not be much action today because of the U.S. holiday.”
Crude for January delivery was at $87.29 a barrel, down 9 cents, in electronic trading on the New York Mercantile Exchange at 10:23 a.m. London time. Today’s transactions will be booked with tomorrow’s trades for settlement purposes. The contract climbed 63 cents yesterday to $87.38, the highest close since Nov. 19. Prices are down 12 percent this year.
Brent for January settlement slid 30 cents to $110.56 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $23.27 to New York- traded West Texas Intermediate grade. The spread widened for a third day yesterday to $23.48.
U.S, Egypt
Israel and Hamas are seeking to solidify the cease-fire which took effect at 9 p.m. local time yesterday and was announced by Egyptian Foreign Minister Mohamed Amr and U.S. Secretary of State Hillary Clinton.
“Given the supply risks from the Middle East, I don’t really think prices will be going down further,” said Tetsu Emori, a chief fund manager at Astmax Investment Management Inc. in Tokyo who predicts Brent crude will trade around $120 to $125 a barrel by the end of the year.
Israeli leaders have said that all options, including a military strike, are justified to counter Iran’s nuclear program, which they describe as an existential threat. Iran is the fifth-largest oil producer in the Organization of Petroleum Exporting Countries, data compiled by Bloomberg show.
Falling Stockpiles
The Chinese manufacturing index added to signs that economic growth is rebounding after a seven-quarter slowdown.
The preliminary reading was 50.4 for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics. It compares with a final level of 49.5 for October. A reading above 50 indicates expansion.
“China has been providing good fundamentals, and if the economy moves to a higher level, they need oil,” said Emori.
Oil’s advance in New York may stall around $89.50 a barrel, along the top of a downward-sloping trend channel on the daily chart, according to data compiled by Bloomberg. Futures halted a rally this week in this channel, which goes back about two months. Sell orders tend to be clustered near technical- resistance levels.
U.S. crude stockpiles declined to 374.5 million barrels in the week ended Nov. 16 as imports slowed and refiners boosted processing, according to Energy Department data. Supplies were forecast to increase by 1 million barrels, according to a Bloomberg News survey of analysts.
The first inventory drop in three weeks was “a surprise decline,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note.
To contact the reporters on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
