Oil Rises Above $101 After 15% Weekly Loss
Oil Price Rises Above $101
Jonathan Alcorn/Bloomberg
Tugboats escort the BP Plc British Pride oil tanker into the harbor in Long Beach, California, on Feb. 24, 2011. Crude oil in New York rebounded from its biggest weekly decline since 2008.
Tugboats escort the BP Plc British Pride oil tanker into the harbor in Long Beach, California, on Feb. 24, 2011. Crude oil in New York rebounded from its biggest weekly decline since 2008. Photographer: Jonathan Alcorn/Bloomberg
May 9 (Bloomberg) -- Edward Meir, a senior analyst at MF Global Ltd., discusses the outlook for oil prices and commodities. Meir speaks with Betty Liu, Jon Erlichman and Dominic Chu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)
May 9 (Bloomberg) -- John Netto, president of M3 Capital LLC, talks about the outlook for oil and commodity prices. Netto speaks with Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
May 9 (Bloomberg) -- Andy Lipow, president of Lipow Oil Associates LLC, talks about the impact flood waters from the Mississippi River may have on refineries in the region and barge and tanker traffic. Lipow speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Crude oil rose above $102 a barrel in New York, rebounding from the biggest weekly decline since 2008, on signals that the global economic recovery remains intact.
Futures climbed 5.5 percent, the most in more than two months, after a report today showed German exports surged to a record in March and the U.S. Labor Department said last week that payrolls expanded. Prices also advanced on concern that a rising Mississippi River will flood Louisiana refineries.
“Some of the economic news has been stronger than expected, reducing worries about demand,” said Rick Mueller, a principal with ESAI Energy LLC in Wakefield, Massachusetts. “The Mississippi floods are increasing concern about disruptions, especially of the products.”
Crude oil for June delivery rose $5.37 to settle at $102.55 a barrel on the New York Mercantile Exchange, the biggest one- day gain since Feb. 22. Futures dropped 15 percent in the five days ended May 6, the largest weekly decline since December 2008. Prices are up 37 percent from a year ago.
Brent crude for June settlement increased $6.77, or 6.2 percent, to $115.90 a barrel on the London-based ICE Futures Europe exchange.
German exports, adjusted for work days and seasonal changes, jumped 7.3 percent from February, when they gained 2.8 percent, the Federal Statistics Office in Wiesbaden said. Economists had forecast a 1.1 percent increase, according to the median of 10 estimates in a Bloomberg News survey. Exports were worth 98.3 billion euros ($141.4 billion) in March, the most since records began in 1950, the statistics office said.
U.S. payrolls expanded by 244,000 last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said May 6 in Washington.
Gasoline Surges
Gasoline advanced the most in 21 months on speculation that rising water levels in the Mississippi River may threaten production at some refineries along the river.
“In an extreme scenario, you may get flooding in refineries, which in the short term may boost the price of gasoline,” said Richard Ilczyszyn, a market strategist at Lind- Waldock, a broker in Chicago. “That would be my only concern here in the States with supply disruptions.”
The Mississippi, the largest U.S. river system, is forecast to crest today in Memphis, Tennessee, just below its 74-year-old record.
Louisiana Refineries
The water has the potential to close oil operations in the New Orleans-to-Baton Rouge region, which has 11 refineries with a combined capacity of 2.5 million barrels a day, or 13 percent of U.S. output, said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline futures for June delivery gained 18.83 cents, or 6.1 percent, to settle at $3.2784 a gallon on the Nymex. The percentage gain is the biggest since July 30, 2009.
“You’re seeing some bottom-fishing today as confidence returns to the commodity markets,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York.
Gains in oil followed commodities’ broad rebound after last week’s decline. The Standard & Poor’s GSCI Index of 24 commodities gained 3.7 percent after tumbling 11 percent last week, the biggest weekly loss since December 2008.
Silver futures rose 5.2 percent to $37.116 an ounce in New York after slumping 27 percent last week.
Commodity Recovery
Goldman Sachs Group Inc., which forecast the plunge, predicted a possible recovery in commodity prices.
“Given the magnitude of the pullback, it does create an opportunity for more upside potential, particularly in the second half of this year, when fundamentals are expected to tighten,” Jeffrey Currie, the London-based head of commodity research at Goldman, said in a May 6 interview.
JPMorgan Chase & Co. raised its oil-price forecasts because OPEC and other producers aren’t matching rising demand and consumers will take time to react to higher prices.
The bank boosted its 2011 Brent crude forecast to $120 a barrel from $110, and changed its estimate for West Texas Intermediate crude, the grade traded in New York, to $109.50 from $99.
“While financial bushfires or perhaps a rapid resolution to the Libyan civil war could radically alter market dynamics, the balance of both risks and fundamentals still points to a supply constrained world,” JPMorgan analysts led by New York- based Lawrence Eagles wrote in a report on May 6.
Hedge funds were caught with bullish bets near record highs last week as oil in New York plunged.
Large speculators reduced net-long positions by 2.4 percent to 293,823 futures and options in the seven days to May 3, according to the U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report. That’s still within 5.7 percent of a record reached in March.
Oil volume in electronic trading on the Nymex was 813,856 contracts as of 3:11 p.m. in New York. Volume totaled 1.06 million on May 6, 44 percent above the average of the past three months. Open interest was 1.65 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Moming Zhou in New York at Mzhou29@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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