Oil Gains for First Time in Three Days, to Gain in Week

Oil rose for the first time in three days in New York, trimming a second weekly decline, as a technical indicator showed prices may have fallen too much.

Futures gained as much as 0.6 percent after dropping 0.4 percent yesterday. Oil’s slide may be limited after it closed above its 100-day moving average, which was at $101.98 today. Buy orders tend to be clustered near chart-support levels. Prices are down 0.2 percent this week amid signs the U.S. economy may be slowing and tension with Iran over its nuclear program may ease.

“Prices appear to be locked on the upside by the 50-day moving average of $104.67 and finding support on the downside at the 100-day moving average,” Stephen Schork, president of the Schork Group in Villanova, Pennsylvania, said in a note.

Crude for May delivery rose as much as 56 cents to $102.83 a barrel in electronic trading on the New York Mercantile Exchange and was at $102.83 at 2:20 p.m. Singapore time. It fell to $102.27 yesterday, the lowest close since April 10. The May contract expires today. The more-actively traded June future rose 48 cents to $103.20 a barrel.

Brent oil for June settlement was at $118.34 a barrel, up 34 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $15.15, from $15.28 yesterday.

Price Outlook

Oil in New York may resume its decline next week on speculation that the U.S. economic recovery will slow, reducing demand for crude, and tension with Iran will ease, a Bloomberg survey showed. Seventeen of 30 analysts forecast prices will decline through April 27. Seven respondents predicted they will rise and six estimated there will be little change.

U.S. jobless claims dropped by 2,000 to 386,000 last week, according to data from the Labor Department yesterday. The median forecast of economists surveyed by Bloomberg called for 370,000. Existing-home purchases declined to a 4.48 million annual rate last month from 4.6 million in February, the National Association of Realtors in Washington said.

Negotiators from Iran, the five permanent members of the United Nations Security Council and Germany will meet in Baghdad on May 23 to discuss the Persian Gulf nation’s alleged efforts to develop nuclear weapons, a claim it denies. The parties met in Istanbul on April 14 for the first talks in 15 months.

Energy Risk

Iranian Oil Minister Rostam Qasemi said yesterday that he hoped for “good news” from the meeting, according to Shana, an oil ministry news website. Further European Union sanctions will affect global energy-supply security and crude prices, he said. The EU plans to put sanctions on Iran’s energy industry into effect July 1.

“People are beginning to wind back their risk premium associated with Iran,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The U.S. economy is bubbling along but it’s not really giving people the sense that the momentum will have an upward trajectory from here.”

The New York Mercantile Exchange cut the margin requirement on a series of crude spreads two days after President Barack Obama called for an increase to reduce speculative activity by traders. The new rules governing the amount of money investors must put up to back bets on Nymex’s light, sweet crude and Brent spreads will be effective at the close of business April 23, CME Group Inc., the exchange’s parent company, said yesterday.

The changes don’t apply directly to the Nymex oil futures and options contracts, the most actively traded instruments for crude on the exchange. They are specifically for commodity spreads through which a trader can take a position on two linked contracts, said Damon Leavell, a CME spokesman in New York.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

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

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