Oil Little Changed on Jobless Claims, Keystone Pipeline

Oil was little changed in New York as U.S. jobless claims increased more than analysts expected and TransCanada Corp. (TRP) shut the Keystone pipeline that tranports oil from Canada to the midcontinent.

Futures slipped 2 cents after the Labor Department said applications for unemployment benefits rose to 388,000 in the week ended Oct. 13, more than the 365,000 median estimate in a Bloomberg survey of economists. TransCanada shut the line after finding an anomaly and cut oil flows to Cushing, Oklahoma, the delivery point for New York futures, and Midwestern refineries.

“The jobless claims number is bad and is a big drag,” said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy. “The market’s been very reactive to refinery and pipeline snags, and this sort of elevated sensitivity played out today with this Keystone situation.”

Crude for November delivery settled at $92.10 a barrel on the New York Mercantile Exchange. Futures prices have changed less than 25 cents in each of the past five trading days, the longest streak of moves that small in more than a decade.

Implied volatility for at-the-money options expiring in December, a measure of expected swings in futures and a gauge of options prices, was 27.6 percent at 4:50 p.m. in New York, the lowest level since May.

Futures prices have risen 3 cents in the past week and have settled within a 27-cent range since Oct. 11.

The jobless claims increased by 46,000 last week from a revised 342,000 in the prior period that was the lowest level since February 2008, Labor Department figures showed today in Washington.

Jobs Report

“Unemployment is one of the important signals that people are looking at and they are adjusting their models based on the claims,” said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts.

The four-week moving average, a less volatile measure, rose to 365,500 last week from 364,750.

“The jobs data is the elephant in the room,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “You really can’t ignore them and it suggests that oil demand is not going to recover as quickly as people hoped.”

The 590,000-barrel-a-day Keystone line will be shut for three days, James Millar, a company spokesman in Calgary, said in an e-mail. No leaks were found and the integrity of the pipeline is sound, he said.

TransCanada plans to restart the line on Oct. 20.

Canadian Imports

The U.S. imported 1.65 million barrels a day of oil into the central U.S., whose designation is PADD 2, last week, according to the Energy Department. Most of the foreign oil shipped to the Midwest comes from Canada, the largest exporter to the U.S.

“The issues with the Cushing pipeline caused some strength in the market,” said Carl Larry, president of Oil Outlooks & Opinions LLC in New York. “It’s a complete shutdown and is bullish for the market.”

An influx of oil from Canada and domestic shale formations such as the Bakken in North Dakota and the Eagle Ford in Texas boosted U.S. crude stockpiles last week to the most for this time of year since government records began in 1982, an Energy Department report showed yesterday. U.S. output increased to the highest level since May 1995.

Brent Forecast

Goldman Sachs Group Inc. (GS) cut its 2013 forecast for Brent crude futures to $110 a barrel from an earlier projection of $130, citing growth in non-conventional oil supplies from North America in a report e-mailed today.

Brent oil for December settlement declined 80 cents, or 0.7 percent, to end the session at $112.42 a barrel on the London- based ICE Futures Europe exchange.

U.S. crude stockpiles grew 2.86 million barrels in the seven days ended Oct. 12 to 369.2 million, the highest level in more than two months. Output increased for a sixth week to 6.61 million barrels a day.

“The crude oil market is well supplied,” said Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston.

Electronic trading volume on the Nymex was 490,368 contracts as of 4:57 p.m. Volume totaled 542,260 contracts yesterday, 2.6 percent above the three-month average. Open interest was 1.58 million.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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