Oil Heads for First Weekly Gain in Month on Economy, Middle East

Oil headed for its first weekly gain in a month in New York after claims for U.S. jobless benefits dropped to the lowest level in four years and increasing Middle East tensions prompted concern crude supplies may be disrupted.

Futures were little changed after rising 0.9 percent yesterday. First-time unemployment claims fell to 339,000 last week, the lowest since February 2008, according to Labor Department data. Brent oil traded near the highest premium in a year to West Texas Intermediate grade after Turkey said a Syrian plane that it grounded contained munitions, while Italian Foreign Minister Giulio Terzi said Europe is prepared to tighten sanctions on Iran.

“The potential for a blow-up in the Middle East is being reflected in that persistently wide spread between Brent and WTI,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “Jobless claims were better-than-expected.”

Crude for November delivery was at $92.19 a barrel in electronic trading on the New York Mercantile Exchange, up 12 cents, at 3:20 p.m. Singapore time. The contract yesterday climbed 82 cents to $92.07. Prices are up 2.6 percent this week and down 6.7 percent this year.

Brent oil for November settlement on the London-based ICE Futures Europe exchange declined 42 cents to $115.29 a barrel. The European benchmark crude was at a $23.10 premium to WTI, down from $23.64 yesterday, the biggest gap since October 2011.

Middle East

Oil may extend gains in New York after its moving average convergence-divergence indicator rose above the signal line yesterday for the first time in four weeks, according to data compiled by Bloomberg. Investors typically buy contracts on a so-called bullish MACD crossover. Crude has technical resistance along its middle Bollinger Band, around $93.50 a barrel today.

The Syrian Arab Airlines plane that was forced by Turkish F-16 jet to land on Oct. 10 contained equipment and munitions sent for the Syrian Defense Ministry from a Russian institution equivalent to a state arms manufacturer, Recep Tayyip Erdogan, Turkey’s prime minister, said yesterday. The confiscation of the cargo follows the shelling of a Turkish border town by Syrian President Bashar al-Assad’s forces and Turkish artillery barrages in response over the past week.

Europe is prepared to tighten sanctions on Iran if talks stall over the country’s nuclear program, Terzi said in a Bloomberg Television interview yesterday. A European Union ban on the purchase, transport, financing and insurance of Iranian oil went into effect on July 1. Military action against the Persian Gulf nation, which has been threatened by Israeli leaders, wouldn’t be effective, Terzi said.

Crude Stockpiles

U.S. crude inventories rose 1.7 million barrels last week as output climbed to a 17-year high, an Energy Department report showed yesterday. Supplies were forecast to increase 1.5 million barrels, according to the median estimate of 11 analysts in a Bloomberg News survey.

Production rose 78,000 barrels a day to 6.6 million in the week ended Oct. 5, the fastest rate since May 1995, the report showed. Imports were up 115,000 barrels a day at 8.22 million.

Royal Dutch Shell Plc (RDSA), BP Plc (BP/) and Vitol Group are among companies that have applied to the U.S. government for licenses to export “substantial” amounts of crude for the first time in decades, the Financial Times reported, without saying where it got the information.

Gasoline stockpiles fell 534,000 barrels to 195.4 million last week, dropping for the 10th time in 11 weeks to the lowest since October 2008, the Energy Department said. Imports of the motor fuel declined and refinery output slid to 8.6 million barrels a day, the lowest since March. Distillate-fuel supplies, including heating oil and diesel, decreased 3.2 million barrels to 120.9 million.

The Organization of Petroleum Exporting Countries will reduce shipments by 0.3 percent this month, according to Oil Movements. The group will export 23.83 million barrels a day in the four weeks to Oct. 27, down from 23.89 million a month earlier, the tanker tracker said yesterday in a weekly report. The data exclude Angola and Ecuador.

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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