Oil Completes Longest Run of Weekly Gains Since 2009

Oil completed a seventh weekly gain in New York, the longest run of advances in almost four years, on speculation that stronger economic growth will boost demand.

Prices were little changed today as the euro strengthened to an 11-month high against the dollar after the European Central Bank said banks will hand back a greater amount of loans than analysts estimated and German business confidence rose for a third month in January. U.S. oil demand grew last week by the most in a month, government data showed yesterday.

“The German confidence number is a pretty good sign that the economy is improving,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “We have a better economic outlook and more people are expecting stronger growth and higher oil demand.”

West Texas Intermediate for March delivery slid 7 cents to settle at $95.88 a barrel on the New York Mercantile Exchange, ending the week with a 0.3 percent gain. Trading volume was 15 percent below the 100-day average at 3:10 p.m. Futures have advanced 12 percent in the seven-week winning streak, the longest since April 2009.

Brent for March delivery settled unchanged at $113.28 a barrel on the London-based ICE Futures Europe exchange. Volume was 20 percent above the 100-day average. The European benchmark contract was at a premium of $17.40 after contracting to $15.16 on Jan. 17, the narrowest in almost six months.

Seaway Pipeline

The Brent-WTI spread widened by $1.83 on Jan. 23 after Enterprise Products Partners LP (EPD) said capacity was limited at the Jones Creek terminal on the Seaway pipeline, cutting shipments from Cushing, Oklahoma, the delivery point for WTI futures, to the Gulf Coast. The delivery point in Katy, Texas, has allowed Seaway to “make up the difference” from the restrictions, the company said today.

Some 278 financial institutions will return 137.2 billion euros ($184.4 billion) on Jan. 30, the first opportunity for early repayment of the initial three-year loan, the Frankfurt- based ECB said in a statement today. That compares with the median forecast of 84 billion euros in a Bloomberg News survey of economists.

The German Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 104.2 from 102.4 in December. That’s the highest since June and the third straight gain. Economists predicted an increase to 103, according to a Bloomberg survey.

The euro gained as much as 0.8 percent to $1.3479, the highest level since February. A strengthening euro increases dollar-denominated oil’s appeal as an investment alternative.

‘Good Data’

“The German data is a boost for oil and the weak dollar also helps,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “We’ve had a week of good economic data.”

The Labor Department reported yesterday that U.S. jobless benefit claims fell to a five-year low last week. The Standard & Poor’s 500 Index rose for an eighth day today, helping boost oil futures.

Petroleum consumption in the U.S. climbed 3.9 percent in the week ended Jan. 18 to 18.6 million barrels a day, the Energy Information Administration, the Energy Department’s statistical arm, reported yesterday. Gasoline demand grew 1.3 percent to 8.43 million barrels a day.

Advance Predicted

Oil may rise next week on stronger economic growth, a Bloomberg survey showed. Eighteen of 36 analysts surveyed by Bloomberg, or 50 percent, forecast crude will increase through Feb. 1. Eleven respondents, or 31 percent, predicted a drop. Seven said there would be little change.

Prices fell as much as 0.5 percent in early trading after the Commerce Department reported new U.S. homes declined 7.3 percent to a 369,000 annual pace in December.

“The home sales data buck the trend of all the other good data and deflate the enthusiasm,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “It won’t be surprising to see some profit-taking at the end of week. Oil is following equities.”

Electronic trading volume on the Nymex was 376,321 contracts as of 3:08 p.m. It totaled 639,215 contracts yesterday, 29 percent higher than the three-month average. Open interest was 1.51 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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