Oil Set for Biggest 2012 Weekly Gain

Oil rose for a third day in New York, heading for the biggest weekly gain this year, as signs of an improving U.S. economy and progress on a bailout for Greece bolstered the outlook for fuel demand. Brent touched an eight- month high.

West Texas Intermediate futures climbed as much as 0.6 percent today and have gained 4.1 percent this week, the most since the five days ended Dec. 23. U.S. applications for jobless payments fell to the lowest since 2008, the Labor Department said yesterday. European governments are considering cutting interest rates on emergency loans to Greece and using European Central Bank contributions to plug a financing gap for the second bailout, two people familiar with the discussions said.

“The U.S. economy is in better shape than had been feared,” Eugen Weinberg, the head of commodities research at Commerzbank AG in Frankfurt, who predicts Brent crude will slide toward $110 a barrel by the end of the year. “The current price action is a liquidity and investment-driven rally on the back of U.S. economic sentiment and improving equity markets, fueled further by fears of possibly supply cutbacks.”

WTI for March delivery rose as much as 66 cents to $102.97 a barrel on the New York Mercantile Exchange and was at $102.76 at 1:19 p.m. London time. Prices yesterday rose to $102.31 yesterday, the highest close since Jan. 4.

Brent oil for April settlement was down 19 cents at $119.92 a barrel on the ICE Futures Europe exchange, after advancing to $120.70 earlier, the highest since June. Brent’s premium to WTI for was at $16.86, compared with a record $27.88 on Oct. 14.

‘Main Driver’

Crude in New York has technical resistance along the upper Bollinger Band on the daily chart, according to data compiled by Bloomberg. This indicator is around $102.82 a barrel today. Sell orders tend to be clustered near chart-resistance levels.

Oil may rise next week on concern that shipments will be disrupted by tension between Iran and the West over the country’s nuclear program, a Bloomberg News survey showed. Fifteen of 37 analysts, or 41 percent, forecast oil will climb through Feb. 24. Twelve respondents, or 32 percent, predicted prices will decline and 10 said there will be little change.

“For the next few months, the demand side for the oil market should be getting better,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo who helps manage $390 million and predicts futures in New York will reach $145 a barrel this year. “The main driver of the market is Brent, which potentially has more lift to the upside due to supply-side risks.”

Threats From Iran

Daily volumes in options granting the right to buy Brent for more than the current market price have risen above 25,000 on four days during the past two weeks in New York, signaling an increase in bets on a possible price rally.

Iran said Feb. 15 it was cutting crude shipments to France and the Netherlands, and had loaded locally built fuel plates into its nuclear research reactor in Tehran, according to reports by the state-run Mehr news agency and Press TV. The EU decided last month to halt purchases from Iran starting July 1 in an attempt to halt its nuclear program.

Iran will increase the volume of oil it ships to China “soon,” state-run Mehr news agency reported yesterday, citing an unidentified official at National Iranian Oil Co.

In the U.S., applications for unemployment payments dropped by 13,000 in the week ended Feb. 11 to 348,000, the Labor Department said yesterday. The claims were less than the most- optimistic estimate of 45 economists surveyed by Bloomberg News.

Progress in Greece

Greece expects euro-area finance ministers to approve a second aid package at a meeting on Feb. 20, according to Pantelis Kapsis, a government spokesman. Overcoming the final obstacles may enable finance ministers to approve the 130 billion-euro ($170 billion) lifeline and a bond exchange with private investors that are critical to staving off a Greek default in March, the German finance ministry told coalition lawmakers in Berlin yesterday, three officials said.

Oil prices are rising on demand from Asian countries, including China, the world’s second biggest crude consumer, according to HSBC Holdings Plc.

“Most blame geopolitics for the latest spike, and we don’t quibble with that,” Frederic Neumann, co-head for Asian economic research at the bank in Hong Kong, said in a report today. “But fundamentally, Asia’s huge appetite for crude is providing the backdrop.”

China’s crude imports increased 7.4 percent from a year ago to 23.41 million metric tons in January, a record high, according to preliminary data from Beijing-based General Administration of Customs on Feb. 10. Final figures are scheduled to be released on Feb. 21.

Saudi Arabian Oil Co. plans to re-open the Damman oilfield, the company’s oldest, and produce there for the first time in 30 years in response to “tight market conditions,” the Economist Intelligence Unit reported yesterday. Officials at Aramco’s headquarters in Dhahran, Saudi Arabia, didn’t answer phone calls seeking comment.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.