Oil Climbs, Heads for Second Week of Gains, on Economic Optimism

Oil rose in New York, heading for a second weekly gain, as economic data bolstered optimism fuel demand will increase in the U.S., the world’s biggest crude- consuming nation.

Futures gained as much as 0.7 percent, recovering from yesterday’s decline, on bets U.S. employers added jobs. Non-farm payrolls probably climbed by 146,000 workers in January, according to a survey of economists before a report today. The Labor Department said the number of Americans filing first-time claims for jobless benefits fell more than expected last week. Continuing protests in Egypt increased concern among investors that shipments through the Suez Canal will be disrupted.

“Everybody is watching for the jobs data due out tonight,” said Ken Hasegawa, a commodity sales manager at broker Newedge in Tokyo. Some traders are betting the report will be better than expected, he said, “so it’s possible the oil price will climb. Oil is well supported at the $90 level.”

The March contract gained as much as 66 cents to $91.20 a barrel in electronic trading on the New York Mercantile Exchange, and was at $90.89 at 3:42 p.m. Singapore time. Yesterday, it fell 32 cents to $90.54. Prices are up 1.8 percent this week and 24 percent over the past year.

Brent crude for March settlement was at $101.93 a barrel, up 17 cents, on the ICE Futures Europe exchange in London. The contract yesterday fell 0.6 percent to $101.76, the first decline in five days.

Crude prices closed lower yesterday as the euro dropped against the dollar, reducing the appeal of dollar-priced commodities for European traders.

Egypt Concerns Remain

Oil rose as much as 1.3 percent yesterday as demonstrations in Egypt continued, prompting concern that unrest may spread to other parts of the Middle East and disrupt supplies. Clashes broke out between anti-government groups and supporters of President Hosni Mubarak in Cairo.

About 2.5 percent of global oil output moves through Egypt via the Suez Canal and the Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc. The waterway continues to operate and the country’s energy terminals are open, Inchcape Shipping Services said yesterday.

“Egypt will continue to be a bullish factor even without a supply shortage,” said Newedge’s Hasegawa. “It’s really a matter of sentiment.”

U.S. companies added 187,000 workers last month, according to figures from ADP Employer Services on Feb. 2. The median estimate in the Bloomberg News survey called for a 140,000 gain.

“U.S. data was supportive, with jobless claims better than expected,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today.

Brent Premium

Brent traded at a premium of $11.26 a barrel to New York- traded West Texas Intermediate oil today.

“The WTI inventory at Cushing is at a record and this is a big issue from a fundamental point of view,” said Hasegawa. “Brent is much stronger than WTI now so the spread may widen.”

U.S. crude inventories increased by 2.59 million barrels to 343.2 million in the week ended Jan. 28, the Energy Department said Feb. 2. They were forecast to climb by 2.5 million, according to analysts in a Bloomberg News survey.

Stockpiles at Cushing, Oklahoma, the delivery point for WTI, rose 667,000 barrels to 38.3 million, the highest since the department started keeping records at the storage hub in 2004.

Oil may decline next week as U.S. inventories increase and fuel consumption drops, a Bloomberg News survey showed.

Fourteen of 31 analysts, or 45 percent, forecast crude oil will drop through Feb. 11. Twelve respondents, or 39 percent, predicted prices will climb and five estimated little change. Last week, 46 percent said futures would decrease.

To contact the reporter on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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