IV:U.S. oil futures rise to 1-week high ahead of supply data
Investing.com - Crude oil futures rose to a one-week high on Tuesday, as market players awaited key U.S. weekly supply data to gauge the strength of oil demand from the world’s largest consumer.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD94.21 a barrel during European morning trade, up 0.4%.
New York-traded oil futures held in a range between USD93.82 a barrel, the daily low and a session high of USD94.24 a barrel, the strongest level since November 26.
The January contract settled up 1.19% on Monday to end at USD93.82 a barrel.
Oil futures were likely to find support at USD92.56 a barrel, the low from December 2 and resistance at USD94.68 a barrel, the high from November 26.
Monday’s gains came after the Institute for Supply Management said that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November, fuelling optimism over the economic recovery.
Prices extended gains on Tuesday amid forecasts U.S. crude stockpiles dropped last week for the first time since September.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 650,000 barrels.
Traders have been concerned over rising U.S. inventories and increased production levels in recent weeks.
U.S. crude oil inventories totaled 391.4 million barrels as of last week, the most since June, while domestic output hit 8.02 million barrels a day, the highest level in almost 25 years.
Investors now looked ahead to key U.S. economic data later in the week to further gauge the strength of the economy and the need for stimulus.
The U.S. is to release data on third quarter gross domestic product on Thursday, while November’s nonfarm payrolls report is scheduled for Friday.
The Federal Reserve, which holds its next meeting on December 17-18, has said the timing of its tapering depends on the health of the labor and housing markets.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Market players are also looking ahead to a meeting of the Organization of the Petroleum Exporting Countries in Vienna later this week. OPEC is forecast to keep its supply target unchanged at 30 million a day on December 4.
Saudi Arabian Oil Minister Ali al-Naimi said earlier that the global oil market is “in equilibrium”. The country produces nearly a third of the oil from the cartel’s 12 members.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for January delivery rose 0.2% to trade at USD111.68 a barrel. The spread between the Brent and U.S. crude contracts stood at USD17.47 a barrel.
London-traded Brent futures rallied to a three-month high of USD112.34 a barrel on Monday.
Brent prices continued to draw support from ongoing concerns over a disruption to supplies from Libya. The OPEC member is the holder of Africa’s biggest oil reserves.
