BLBG:WTI Oil Trades Near 14-Month High on Outlook for Jobs
West Texas Intermediate crude traded near the highest price in 14 months and was poised for a second weekly gain on speculation that demand will increase in the U.S., the world’s largest oil consumer.
Futures were little changed in New York after closing on July 3 at $101.24 a barrel, the highest since May 3 last year. U.S. employers probably created almost as many jobs in June as in the prior month, according to a Bloomberg News survey before a Labor Department report today. The country’s crude inventories fell by 10.3 million barrels last week, the most this year, government data showed.
“Oil demand will grow gradually in the second half thanks to some rebound in economies, especially in the U.S.,” Ken Hasegawa, an energy-trading manager at Newedge Group in Tokyo, said by phone. “But there is no shortage of oil, therefore upside will be limited.”
WTI for August delivery was at $101.04 a barrel in electronic trading on the New York Mercantile Exchange, down 20 cents at 3:21 p.m. Singapore time. The volume of all futures traded was more than three times the 100-day average. Prices have advanced 4.6 percent since June 28 and are poised to end the week above $100 for the first time since April 2012.
There was no floor trading in New York yesterday because of the U.S. Independence Day holiday. Electronic transactions will be booked for today.
U.S. Jobs
Brent for August settlement was at $105.60 a barrel on the London-based ICE Futures Europe exchange, up 6 cents and headed for a second weekly increase. The European benchmark grade was at a premium of $4.62 to WTI contracts. The spread was $4.30 yesterday, the narrowest based on closing prices since January 2011.
U.S. non-farm payrolls probably rose by 165,000 workers in June, after climbing 175,000 in May, according to the median of 90 estimates from economists surveyed by Bloomberg. The Labor Department report will probably show the unemployment rate retreated to 7.5 percent, matching a four-year low in April.
The U.S. accounted for 21 percent of global oil consumption last year, compared with 11 percent for China, the second-biggest user, according to BP Plc (BP/)’s Statistical Review of World Energy.
Egypt Unrest
WTI surged above $100 a barrel this week for the first time since September 2012 as a political showdown in Egypt heightened concern that unrest in the most populous Arab country will spread and disrupt regional oil supplies.
Goldman Sachs Group Inc. maintained its three-month forecast for Brent crude at $105 a barrel, saying there hasn’t been a supply disruption reported in Egypt. Still, the options market has turned “short-term bullish,” New York-based analyst Jeffrey Currie said in an report e-mailed today.
Egypt’s army forced Mohamed Mursi from power a year after his election and a military-appointed interim president, Adly Mansour, was sworn in. The White House and most leaders in Congress have so far avoided describing the transition as a “coup,” which could cost Egypt more than $1.5 billion a year in military and humanitarian aid under U.S. law.
Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which a combined 2.24 million barrels a day of oil was shipped from the Red Sea to Europe and North America in 2011, according to the U.S. Energy Information Administration. The Middle East accounted for 35 percent of global output in the first quarter of this year, said the International Energy Agency in Paris.
Relative Strength
WTI’s rally may be stalling as prices rise too quickly for further gains to be sustainable. The 14-day relative strength index was at 68.2 on July 3, the highest since Feb. 1, according to data compiled by Bloomberg. Investors typically sell contracts when the reading is above 70, which signals a market is overbought.
Futures will probably decline next week, a Bloomberg survey showed. Twenty-one of 36 analysts and traders, or 58 percent, forecast crude will decrease through July 12. Twelve respondents, or 33 percent, predicted a gain. Three projected no change. Last week, 39 percent in the survey forecast a drop.
The Organization of Petroleum Exporting Countries will boost crude shipments by 2.3 percent through late July as driving demand peaks during the Northern Hemisphere summer, according to Oil Movements.
OPEC, which pumps about 40 percent of the world’s oil, will ship 24.18 million barrels a day in the four weeks ending July 20, up from 23.64 million in the period to June 22, the tanker tracker said in an e-mailed report yesterday. The data exclude Angola and Ecuador.
To contact the reporters on this story: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net; Winnie Zhu in Singapore at wzhu4@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
