BLBG:Oil Trims First Monthly Gain Since August as Rise Seen Excessive
Oil trimmed its first monthly gain since August in New York amid speculation that the biggest daily rise in almost two weeks was excessive.
Futures slid as much as 0.7 percent after climbing 1.8 percent yesterday, the most since Nov. 19, as a Commerce Department report showed the U.S. economy expanded more than previously estimated last quarter. West Texas Intermediate is giving up gains after failing to trade higher than the 50-day moving average, a sign of technical resistance, according to data compiled by Bloomberg. Prices may be little changed next week amid U.S. budget talks, a Bloomberg News survey showed.
“The market climbed to the top-end of a range and people have grabbed some profits,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney.
Crude for January delivery dropped as much as 60 cents to $87.47 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.86 at 2:34 p.m. Singapore time. The contract increased $1.58 yesterday to $88.07. Prices are down 0.5 percent this week, the first weekly decline in four, and up 1.9 percent this month.
Brent for January settlement slid 6 cents to $110.70 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.84 to West Texas Intermediate futures, from $22.69 yesterday.
Fiscal Cliff
Oil in New York rose yesterday after the revised figures from the Commerce Department showed U.S. gross domestic product grew at a 2.7 percent annual rate last quarter, up from a 2 percent prior estimate. WTI pared gains after reaching its 50- day moving average. This indicator, at about $88.61 a barrel today, is where sell orders may be clustered.
Futures will probably be little changed next week amid talks in Washington aimed at avoiding more than $600 billion in spending cuts and tax increases known as the fiscal cliff that are due to kick in next year, according to seven of 15 analysts and traders surveyed by Bloomberg. Five respondents estimated futures will rise and three projected a decline.
Oil is poised for its first monthly increase since August after rising on concern that tension in the Middle East and North Africa will spread and disrupt crude supplies. Eight days of aerial assaults ravaged the Gaza Strip and made Tel Aviv and Jerusalem missile targets before Israel and Hamas signed a Nov. 21 cease-fire agreement. Protests erupted in Egypt after President Mohamed Mursi issued a Nov. 22 decree that prevents his actions from being challenged by the courts.
China Demand
The Middle East and North Africa accounted for about 40 percent of the world’s petroleum output last year, according to BP Plc (BP/)’s Statistical Review of World Energy.
Prices have also gained amid signs of an economic recovery in China, the world’s second-biggest crude consumer. Government data from retail sales to industrial production have shown growth picking up this quarter after a seven-quarter slowdown.
Respondents in a Bloomberg survey this week who see the Chinese economy improving or remaining stable surged to 72 percent from September’s 38 percent, according to the quarterly global poll of investors, analysts and traders who are Bloomberg subscribers.
Refiners in Asia increased purchases of West African crude for loading in December to 1.76 million barrels a day, the most in six months, as China raised its imports by 23 percent, a survey of seven traders and analysis of loading plans obtained by Bloomberg News showed.
“This price rebound was triggered by better than expected manufacturing growth data from China and optimism that the U.S. can avoid the fiscal cliff,” said Gordon Kwan, the head of regional energy research for Mirae Assets Securities Ltd. in Hong Kong, who predicts Brent will trade from $105 to $120 a barrel this year. “This together with simmering tensions in the Gaza Strip should continue to keep prices buoyant in December.”
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
