Oil Gains a Second Day on Stimulus Speculation, OPEC Call
Oil rose in New York, heading for a second week of gains, on speculation that the U.S. Federal Reserve may take more steps to stimulate the economy and on OPEC’s call for members to cut production in excess of quotas.
Futures climbed as much as 1.1 percent, their second consecutive advance. Reports yesterday showed U.S. jobless claims unexpectedly increased and the cost of living fell by the most in more than three years. The Organization of Petroleum Exporting Countries needs to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary-General Abdalla El-Badri said.
“There are more supportive factors now for oil than there are negative,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “The whole purpose of the cartel is to provide guidelines to production. Compliance is just a word. If the price slips below $80 a barrel then quotas will change and give prices a big bump.”
Oil for July delivery rose as much as 89 cents to $84.80 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.68 at 2:54 p.m. Singapore time. The contract increased 1.6 percent yesterday to $83.91, the highest settlement since June 8. Prices are 0.7 percent higher this week and down 14 percent in 2012.
Brent crude for August settlement on the London-based ICE Futures Europe exchange climbed as much as 93 cents, or 1 percent, to $98.10 a barrel. The European benchmark contract was at a premium of $13.10 to New York crude. The gap was $13.12 yesterday, the narrowest close since May 2.
Bullish Chart
Oil in New York is extending gains after yesterday’s rebound created a so-called bullish engulfing pattern on the daily candlestick chart, according to data compiled by Bloomberg. Crude has long-term technical support along its 200- week moving average, around $80.81 a barrel. Buy orders tend to be clustered near chart-support levels.
OPEC kept its output limit at 30 million barrels a day at a meeting in Vienna yesterday as concern global growth is shrinking outweighed calls by some members for supply cuts to stem sliding prices. Increased production from Saudi Arabia, the world’s biggest oil exporter, has been blamed for the drop in prices by members including Iran, whose own exports will probably be curbed by a European Union embargo scheduled to start July 1. OPEC’s 12 members pump about 40 percent of the world’s crude.
Korea Imports
South Korea’s crude imports from Iran in May fell 40 percent from a year earlier, the customs service said today. The world’s fifth-largest oil importer purchased 550,714 metric tons, or about 17,765 tons a day, from Iran last month, compared with 911,889 tons a year earlier, according to the service’s website.
Claims for unemployment insurance payments in the U.S. unexpectedly climbed by 6,000 to 386,000 in the week ended June 9, Labor Department figures showed yesterday. Economists surveyed by Bloomberg News projected claims would fall to 375,000. The cost of living in the world’s largest oil-consuming nation declined 0.3 percent in May.
Oil in New York may fall next week on speculation Europe’s debt crisis will spread after the downgrade of Spain’s credit rating and weekend elections in Greece, a Bloomberg News survey showed. Seventeen of 39 analysts and traders, or 44 percent, forecast crude will decline through June 22. Fifteen respondents, or 38 percent, predicted futures will increase and seven said there will be little change.
China is hoarding crude at the fastest rate since the Beijing Olympics four years ago as oil’s slump prompts the country to import unprecedented volumes, even as refining slows.
The world’s second-biggest oil consumer built a surplus of about 90 million barrels of crude in the first five months of the year, government data show. The excess, the highest since the run-up to the 2008 games, is probably being kept at emergency and commercial storage centers, according to the International Energy Agency.
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
June 15 (Bloomberg) -- Tony Regan, a Singapore-based oil consultant at Tri-Zen International, talks about the outlook for crude oil prices. The Organization of Petroleum Exporting Countries kept its production ceiling unchanged, as concern that global growth is shrinking outweighed calls by some members for supply cuts to stem sliding prices. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 14 (Bloomberg) -- Stephen Schork, president of the Schork Group, talks about the Organization of Petroleum Exporting Countries' decision to keep its production ceiling unchanged and the outlook for OPEC output. Schork also discusses the outlook for oil and gasoline prices. He speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
June 14 (Bloomberg) -- Jason Schenker, president of Prestige Economics LLC, talks about the outlook for the oil market and production, and the impact of the European debt crisis on the Organization of Petroleum Exporting Countries. Schenker speaks with Adam Johnson on Bloomberg Television's "InBusiness." (Source: Bloomberg)
June 14 (Bloomberg) -- Fereidun Fesharaki, chairman at FACTS Global Energy Inc., talks about the outlook for crude oil and natural gas markets. Fesharaki also discusses his expectations for today's meeting of the Organization of Petroleum Exporting Countries. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
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