Oil Gains for Second Day on Keystone Pipeline, U.S. Consumer Confidence

Oil rose for a second day in New York, trimming the biggest monthly decline in a year, after a pump- station leak forced the shutdown of the Keystone pipeline that carries crude to the largest U.S. storage hub.

Futures climbed as much as 0.9 percent as TransCanada Corp. (TRP) closed the link that runs from Alberta to Cushing, Oklahoma, where New York-traded oil is stored. Prices also gained on speculation consumer confidence in the U.S., the world’s biggest crude user, increased to the highest in three months.

“Market participants are looking for more bullish factors rather than bearish factors as the correction is over,” said Tetsu Emori, a commodity-fund manager at Astmax Ltd. in Tokyo, who predicts prices may rise to about $115 to $120 a barrel. “That’s why the market is focusing on such news even if it’s not really having a significant impact on supplies.”

Crude for July delivery climbed as much as 89 cents to $101.48 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.45 at 2:55 p.m. Singapore time. Futures, down 11 percent this month, are set to snap an eight-month rising streak.

Floor trading was closed yesterday for the U.S. Memorial Day holiday and transactions will be booked with today’s trades for settlement purposes.

Brent crude for July settlement on the London-based ICE Futures Europe exchange climbed as much as 97 cents, or 0.9 percent, to $115.65 a barrel. Yesterday, it fell 0.3 percent to $114.68, the lowest settlement since May 24. Prices, down 8.4 percent this month, are also set to end an eight-month rally.

Pipeline ‘Issue’

Calgary-based TransCanada shut the 591,000 barrel-a-day Keystone pipeline after a “an issue with a fitting” caused a 40-barrel oil leak at a pump station, according to an e-mailed statement from Terry Cunha, a company spokesman. There was no fault on the pipeline itself, he said.

Crude stockpiles at Cushing were at 40 million barrels in the week ended May 20, compared with 37.6 million a year earlier, the Energy Department said last week. Supplies reached a record 41.9 million in the week to April 8.

The Conference Board’s index of U.S. consumer confidence, scheduled for release at 10 a.m. in New York, will climb to 66.5 in May from 65.4 in April, based on the median estimate of 60 economists surveyed by Bloomberg News. Other reports this week may show U.S. factory output and job growth slowed while home- price declines accelerated.

Fibonacci Support

Oil in New York is set to finish May trading above a long- term support level on monthly technical charts. Futures remain above $94.97 a barrel, the 61.8 percent Fibonacci retracement of the market’s rally from $10.35 in December 1998 to $147.27 in July 2008, according to data compiled by Bloomberg. Investors use Fibonacci levels to identify points to buy or sell contracts.

“Heavy long-liquidation has already happened in May,” said Emori at Astmax. “For the month of June, I think it’s quite positive.”

Crude is the fifth-worst performer in May among 22 commodities tracked by Bloomberg. Silver is the biggest loser with a 21 percent drop and orange juice, up 5 percent, is the strongest of five gainers.

Brent, the European benchmark, traded at a premium of $13.84 a barrel to U.S. futures. The difference between front- month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.

North Africa

Brent has increased 22 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Iran and Syria. In Yemen, the death toll from an attack on protesters by security forces rose to 57, with more than 1,000 injured in the city of Taiz, al-Jazeera television reported yesterday.

Libya’s rebel-leadership council yesterday sought representation at next week’s OPEC meeting. The country has lost 82 percent of its oil output this year because of protests against leader Muammar Qaddafi. The 12 members of the Organization of Petroleum Exporting Countries, which gathers June 8 in Vienna, pump about 40 percent of the world’s crude.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.

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