BLBG:Oil Falls in New York After Biggest Weekly Gain in Four Months
Oil fell in New York on speculation the biggest weekly advance in almost four months was excessive even amid signs of economic growth in the U.S., the world’s biggest crude consumer.
Futures slid as much as 0.6 percent after rising 2.5 percent last week, the most since Sept. 14. Crude dropped after reaching technical resistance, according to data compiled by Bloomberg. Prices capped a fourth weekly gain on Jan. 4 after a Labor Department report showed employers in the U.S. added 155,000 workers in December, exceeding the 152,000 median forecast in a Bloomberg survey.
“I wouldn’t be surprised if we see some selling today after the strong finish last week,” said Victor Shum, the managing director at IHS Consulting in Singapore. “The markets primarily reacted to the U.S. jobs data. I think it’s too strong.”
Crude for February delivery declined as much as 53 cents to $92.56 a barrel and was at $92.62 in electronic trading on the New York Mercantile Exchange at 4:06 p.m. Singapore time. The contract rose 17 cents to $93.09 on Jan. 4, the highest settlement since Jan. 2. Prices slid 7.1 percent last year.
Brent for February settlement was down 35 cents, or 0.3 percent, at $110.96 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $18.35 to West Texas Intermediate futures. The difference was $18.22 on Jan. 4, the narrowest in more than three months. Trading volume in WTI was 17 percent above the 100-day average, while Brent was 1 percent higher.
Technical Resistance
Last week’s rally took WTI futures to technical resistance along the 50-week moving average, according to data compiled by Bloomberg. This indicator is around $93.70 a barrel today. Sell orders tend to be clustered near chart-resistance levels.
Hedge funds raised bullish bets on WTI to the highest level in 11 weeks before lawmakers passed a bill to undo automatic tax increases that threatened the U.S. economy. Money managers boosted net-long positions by 11 percent in the seven days ended Jan. 1 to the most since Oct. 16, the Commodity Futures Trading Commission’s Commitments of Traders report showed on Jan. 4.
The House of Representatives approved a Senate bill at 11 p.m. on Jan. 1, protecting 99 percent of households from higher income taxes.
WTI may rise this week on speculation that stronger economic growth will increase fuel demand, a Bloomberg News survey showed Jan. 4. Fourteen of 24 analysts and traders, or 58 percent, surveyed last week forecast New York crude will gain through Jan. 11. Five respondents, or 21 percent, predicted a drop and five said there would be little change.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
