Oil Heads for First Weekly Gain in Three; Total Sees $100 Brent Support
Oil headed for its first weekly gain in three, trading near a one-week high in New York amid signs of economic recovery in the U.S., the world’s biggest crude consumer.
Futures gained as much as 0.8 percent, advancing for a third day. The U.S. Commerce Department may say today that economic growth accelerated in the fourth quarter. Durable goods orders rose more than forecast in December, according to data published yesterday, and a report this week showed gasoline demand grew the most in more than two months. Total SA Chief Executive Officer Christophe de Margerie said it would take a “real recession” to send Brent crude below $100 a barrel.
“To see a lower price of oil, below $100, you really would need to have a real recession, and I don’t think we will get a real recession,” de Margerie said in an interview on Bloomberg TV with Maryam Nemazee from Davos, Switzerland.
Crude for March delivery on the New York Mercantile Exchange rose as much as 80 cents to $100.50 a barrel and was at $100.16 a barrel at 12:33 p.m. London time. Yesterday, the contract gained 30 cents to $99.70, the highest settlement since Jan. 19. Prices have climbed 1.7 percent this week and 17 percent in the past year.
Brent oil for March settlement on the London-based ICE Futures Europe exchange was at $111.21 a barrel, up 42 cents. The European benchmark contract was at a premium of $11.05 to West Texas futures. The spread shrank to $9.90 on Jan. 18 and reached a record $27.88 on Oct. 14.
Signs of Recovery
The Commerce Department may say today that U.S. gross domestic product grew at a 3 percent annual pace in the fourth quarter, after advancing 1.8 percent in the previous three months, according to the median forecast of 79 economists surveyed by Bloomberg News.
“The data we’ve seen out of the U.S. over the last few months is indicating a recovery in the economy,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney, said by telephone today. “The spread between Brent and West Texas has blown out again. That suggests the potential for some supply disruption out of the Middle East is in the back of traders’ minds.”
U.S. bookings for durable goods, or products meant to last at least three years, advanced 3 percent after rising 4.3 percent the prior month, the biggest back-to-back gains in almost a year, based on a Commerce Department report yesterday in Washington. A median 2 percent increase was predicted by 78 economists surveyed by Bloomberg News.
Iran Sanctions
Fuel consumption rose 7.5 percent to 19.2 million barrels a day in the week ended Jan. 20, the largest gain since Nov. 4, the Energy Department said on Jan. 25.
Oil has also risen this week amid concern European Union sanctions on Iran will curb supplies. EU foreign ministers agreed on Jan. 23 to ban petroleum imports from the Persian Gulf nation from July 1 to pressure the country over its nuclear program. Iranian President Mahmoud Ahmadinejad said his country is willing to revive talks on its nuclear plans and accused Western countries of dodging discussions, the state-run Fars news agency reported yesterday.
Iran has threatened to close the Strait of Hormuz in retaliation against the embargo. The waterway is a transit route for about a fifth of the world’s crude, according to the U.S. Department of Energy.
More than 70 percent of investors in a quarterly Bloomberg Global Poll said an attack on Iran’s nuclear facilities would create only a short-term disruption in crude markets. About a third of 1,209 global investors, traders and analysts surveyed from Jan. 23 to Jan. 24 said an attack could trigger an oil shock leading to a global recession.
New York oil has technical support along its 50-day moving average, around $99.28 a barrel today, according to data compiled by Bloomberg. Futures slid to an intraday low yesterday of $99.23. Buy orders tend to be clustered near chart-support levels.
Crude may rise next week on the EU embargo plan and after the Federal Reserve committed to keep interest rates near a record low through 2014, according to a Bloomberg News survey. Fifteen of 32 analysts and traders, or 47 percent, forecast oil will advance through Feb. 3. Ten respondents, or 31 percent, predicted prices will drop and seven estimated there will be little change.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
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