WTI Crude Halts Four-Day Drop Before U.S. Confidence Data

Brent crude advanced to its highest in a week, and West Texas Intermediate snapped a four-day drop, before the release of consumer confidence and housing data in the U.S., the world’s largest consumer of the commodity.

Brent gained as much as 1.7 percent in London amid forecasts that the Conference Board’s index of consumer sentiment, to be released today, probably climbed this month to its highest level since November. WTI slid as much as 1 percent earlier after the energy minister for the United Arab Emirates said global oil demand will stay “relatively weak.” OPEC is forecast to keep its supply target unchanged on May 31.

“The U.S. recovery is advancing, rather than accelerating,” said Guy Wolf, global head of market analytics at Marex Spectron Group in London. “On a relative basis, the U.S. remains the best growth spot of the major economies, but on an absolute basis things are not great.”

Brent for July settlement rose as much as $1.78 to $104.40 a barrel on the ICE Futures Europe exchange, the highest intraday level since May 21. The European benchmark grade was at a premium of $9.17 to WTI. The spread was $8.85 a barrel yesterday, the widest based on closing prices since May 15.

WTI for July delivery rose as much as $1.07, or 1.1 percent, to $95.22 a barrel and was at $95.18 in electronic trading on the New York Mercantile Exchange as of 1:04 p.m. London time. Floor trading was closed yesterday because of the Memorial Day holiday, and yesterday’s transactions will be booked with today’s trades for settlement purposes. Prices are up 1.8 percent this month after a 3.9 percent loss in April.

Suitable Prices

Current prices are “suitable and fair,” said the U.A.E.’s Suhail Mohammed Al Mazrouei, according to the official WAM news agency. Global oil consumption this year will be about 800,000 barrels a day more than in 2012, Al Mazrouei said yesterday. OPEC, which supplies about 40 percent of the world’s oil needs, is producing 30.4 million barrels a day. That’s “only little above the organization’s target, and this reflects the demand,” he said.

WTI has technical support along its middle Bollinger Band on the weekly chart, according to data compiled by Bloomberg. This indicator, at around $92.35 a barrel today, is close to where futures halted declines the past two weeks. Buy orders tend to be clustered near chart-support levels.

Hedge Funds

Hedge funds and other money managers raised bullish bets on Brent by 16,460 contracts in the week ended May 21, according to data from ICE Futures Europe.

Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 146,679 lots, ICE said yesterday in its weekly Commitment of Traders report. The increase marks the fourth weekly gain and brings the level for net-long positions to the highest since the week to Feb. 26.

The Conference Board’s index of U.S. consumer sentiment probably climbed to 71 this month from 68.1 in April, according to the median estimate of economists surveyed by Bloomberg News before the New York-based private research group releases the data today.

The S&P/Case-Shiller index of property values in 20 U.S. cities rose 1 percent in March after a 1.2 percent gain the prior month, economists predicted in a Bloomberg survey. That would put home prices up 10.2 percent from a year earlier, the biggest jump since April 2006.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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