BLBG:Oil Heads for First Monthly Gain Since August on Economic Growth
Oil headed for its first monthly gain since August in New York amid signs of economic growth in the U.S. and China, the world’s biggest crude consumers.
West Texas Intermediate futures were little changed after climbing 1.8 percent yesterday, the most since Nov. 19. The U.S. economy expanded more than previously estimated last quarter, the Commerce Department said in Washington. China’s economy will improve or remain stable, according to most respondents in a Bloomberg quarterly survey this week. Oil has also advanced on concern that violence in the Gaza Strip and Egypt will spread and disrupt Middle East crude supplies.
The rebound in prices this month “was triggered by better than expected manufacturing growth data from China,” said Gordon Kwan, the head of regional energy research for Mirae Assets Securities Ltd. in Hong Kong, who predicts Brent oil will trade from $105 to $120 a barrel for the rest of the year. “This together with simmering tensions in the Gaza Strip should continue to keep prices buoyant in December.”
Crude for January delivery was at $87.88 a barrel, down 19 cents, in electronic trading on the New York Mercantile Exchange at 4:07 p.m. Singapore time. The contract increased $1.58 yesterday to $88.07. Prices are up 1.9 percent this month and down 0.5 percent this week.
Brent for January settlement was down 15 cents at $110.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.73 to West Texas Intermediate futures, from $22.69 yesterday.
Economic Growth
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.
The proportion of respondents who see the Chinese economy improving or remaining stable surged to 72 percent from September’s 38 percent, according to the poll of investors, analysts and traders who are Bloomberg subscribers. Government data this month from retail sales to industrial production have shown China’s growth picking up after a seven-quarter slowdown.
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.
Japan, the world’s third-biggest crude consumer, approved a second round of fiscal stimulus worth 880 billion yen ($10.7 billion) using budget reserves as Prime Minister Yoshihiko Noda attempts to boost the economy before elections on Dec. 16. Combined with a first round announced last month, the latest measures will increase Japan’s gross domestic product by about 0.4 percentage point, the Cabinet Office said in Tokyo today.
Middle East Tension
Oil surged earlier this month amid eight days of bloodshed between Israel and Hamas, which controls the Gaza Strip, before the two sides 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.
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.
Crude’s gains may falter after WTI failed to trade higher than the 50-day moving average, a sign of technical resistance, according to data compiled by Bloomberg. 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.
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
