BLBG:WTI Crude Trades Near Three-Week High on Signs of U.S. Growth
West Texas Intermediate crude traded near the highest level in more than three weeks on signs of a U.S. economic recovery that may boost fuel demand.
Futures fluctuated in New York as they headed for a second weekly gain. U.S. retail sales increased the most in three months in May, while the number of jobless claims dropped last week, according to separate government reports. The nation’s crude supplies unexpectedly rose and gasoline demand dropped last week, official data showed June 12.
“The U.S. consumer is making a reasonable contribution to growth,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who predicts traders may sell WTI at about $97 a barrel. “Given the supply outlook, inventory levels and rising production in the U.S., the market will probably need some sort of news catalyst to get it through that level.”
WTI for July delivery was at $96.55 a barrel, down 14 cents, in electronic trading on the New York Mercantile Exchange at 1:56 p.m. Singapore time. The volume of all futures traded was 27 percent below the 100-day average. The contract gained 81 cents, or 0.8 percent, to $96.69 yesterday, the highest settlement since May 20. Prices are up 0.5 percent this week.
Brent for August settlement was down 26 cents at $104.69 a barrel on the London-based ICE Futures Europe exchange. The July contract expired yesterday. The European benchmark grade was at a premium of $7.92 to WTI futures for the same month.
U.S. Outlook
U.S. retail sales climbed 0.6 percent last month, following a 0.1 percent increase in April, Commerce Department figures showed yesterday. The median forecast of 83 economists surveyed by Bloomberg projected they would rise 0.4 percent. The number of claims for jobless benefits fell by 12,000 to 334,000 in the week ended June 8, the Labor Department reported.
WTI may decline next week amid rising U.S. crude supplies and speculation that the Federal Reserve may taper its monetary stimulus, according to a Bloomberg News survey. Eighteen of 33 analysts and traders, or 55 percent, forecast prices will fall through June 21. Seven respondents, or 21 percent, predicted an increase. Eight projected no change.
Crude inventories increased by 2.52 million barrels last week, the Energy Information Administration data said June 12. That compares with a drop of 1.5 million forecast in a Bloomberg News survey of analysts. U.S. gasoline demand fell to the lowest level for this time of year since 2003, sliding 2 percent to 8.65 million barrels a day, according to the EIA, the Energy Department’s statistical unit.
Pipeline Shut
The Organization of Petroleum Exporting Countries will reduce crude shipments this month as rising U.S. production dulls a seasonal increase in the nation’s imports, tanker tracker Oil Movements said yesterday. The group that supplies about 40 percent of the world’s oil will ship 23.88 million barrels a day in the four weeks to June 29, down 0.3 percent from 23.95 million in the previous period to June 1, the researcher said in a report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador.
Kinder Morgan Inc., the largest U.S. pipeline operator by market value, said yesterday it shut the only line that carries Canadian crude to the West Coast after discovering a spill on June 12 in a remote region of British Columbia. The 300,000 barrel-a-day line transports both light and heavy grades of oil.
Iranian Election
Iranians go to the polls today to select a replacement for President Mahmoud Ahmadinejad, with opinion polls showing voters want a someone who will secure an end to the sanctions imposed to halt the country’s nuclear program. The U.S. and Israel say the Persian Gulf nation is secretly pursuing an atomic weapons capability, while Iran says the program is for civilian energy and medical research.
Iran, OPEC’s sixth-biggest crude producer, gets most of its revenue from oil sales. Diminished exports due to the embargo cost the country between $3 billion and $5 billion a month, Wendy Sherman, U.S. under secretary of state for political affairs, told the Senate Banking Committee in testimony June 4.
The U.S. tightened sanctions against the country on Dec. 31, 2011. Iran’s crude production dropped to 2.5 million barrels a day last month, down from 3.58 million barrels a day in December 2011, according to estimates compiled by Bloomberg.
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
