Oil Trades Near 2-Week High on IMF Forecast, Spanish Sale

Oil traded near the highest close in two weeks after the International Monetary Fund boosted its growth outlook and a Spanish debt sale raised more than planned, easing concern an economic slowdown will curb crude demand.

Futures were little changed in New York after gaining for a second day yesterday. The IMF increased its 2012 global growth forecast to 3.5 percent from 3.3 percent and said oil will advance 10 percent this year on rising demand and possible supply disruptions. Spain sold 3.2 billion euros ($4.2 billion) of bills, compared with a maximum target of 3 billion. U.S. crude stockpiles climbed a fourth week, data from the industry- funded American Petroleum Institute showed.

“The IMF forecast and Spain auction and other indicators from Europe have all been positive factors,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo, who forecasts West Texas Intermediate crude will trade near $105. “The upside is limited from here. It could be time for profit taking after the sharp gains of the last two days.”

Crude for May delivery was at $104.42 a barrel, up 22 cents, in electronic trading on the New York Mercantile Exchange at 1:52 p.m. Singapore time. The contract yesterday gained 1.2 percent to $104.20, the highest close since April 2. Prices are 5.7 percent higher this year.

Brent futures for June settlement were at $118.76 a barrel, down 2 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s front month premium to WTI was at $13.93, from $14.14 yesterday, the lowest level since Feb. 1.

Technical Resistance

Oil in New York has technical resistance along its middle Bollinger Band on the daily chart, around $104.92 a barrel today, according to data compiled by Bloomberg. Futures halted yesterday’s advance near that indicator. Sell orders tend to be clustered close to chart-resistance levels.

The IMF’s oil-price forecast compares with a January projection for a 4.9 percent decline and assumes a level of $114.71 a barrel, based on the average of Brent, Dubai and WTI crude, the Washington-based agency said in a report. Non-fuel commodity prices will drop 10 percent this year, it said.

Crude reached the highest level since May last month amid speculation that Western sanctions aimed at halting Iran’s nuclear program will disrupt Middle East shipments. The U.S. and its allies say Iran is seeking the capability to make an atomic bomb. Iran says it’s conducting research for civilian energy and medical purposes.

U.S. Inventories

U.S. crude stockpiles increased 3.4 million barrels last week, the API said. An Energy Department report today may show they expanded 1.8 million barrels, according to the median of 10 analyst estimates in a Bloomberg News survey.

Gasoline inventories dropped 2.6 million barrels, the API said. They are forecast to slip 1.1 million barrels, according to the Bloomberg survey. Distillate supplies, a category that includes heating oil and diesel, fell 2.4 million barrels compared with a projected 125,000 barrel decline.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

U.S. gasoline demand declined 1.3 percent last week from the prior seven days and slipped below year-earlier levels for the 33rd consecutive week, MasterCard Inc. (MA)’s SpendingPulse report showed yesterday. Drivers bought 8.69 million barrels a day of the fuel in the seven days ended April 13, down from 8.8 million the prior week, it showed.

Market Regulation

Gasoline slid to a six-week low yesterday. Futures for May delivery fell 3.3 cents, or 1 percent, to $3.234 a gallon on the New York Mercantile Exchange. The motor fuel has lost 5.3 percent since reaching a 2012 high of $3.4166 on March 26.

President Barack Obama yesterday urged Congress to bolster federal supervision of oil markets, including bigger penalties for market manipulation and greater power for regulators to increase the amount of money traders must put up to back their energy bets.

Crude prices also rose yesterday after German investor confidence unexpectedly advanced to a two-year high in April, suggesting Europe’s largest economy can weather the debt crisis in the euro region’s periphery.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net

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

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