West Texas Intermediate crude climbed after U.S. consumer confidence rose to the highest level in more than five years while home prices advanced, signs that the economy and fuel use will grow.
Futures gained 0.9 percent and equities increased as the Conference Board’s index of sentiment rose to 76.2 in May, the strongest level since February 2008. The S&P/Case-Shiller index of property values jumped in March by the most in seven years. Saudi Arabia is content with the current oil-market balance, the nation’s petroleum minister said before a May 31 OPEC meeting.
“You are seeing strength in many markets,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Improving data is cause for people to extrapolate that oil demand will increase in the future.”
WTI crude for July delivery rose 86 cents to $95.01 a barrel on the New York Mercantile Exchange. It was the highest settlement since May 21. The volume of all contracts traded was 9.8 percent below the 100-day average at 3:07 p.m. Floor trading was closed yesterday because of the Memorial Day holiday, and yesterday’s electronic transactions were booked with today’s trades for settlement purposes.
Brent oil for July settlement increased $1.61, or 1.6 percent, to end the session at $104.23 a barrel on the ICE Futures Europe exchange. Volume for all contracts was 33 percent lower than the 100-day average. The European benchmark grade traded at a $9.22 premium to WTI, the widest since May 15.
The confidence total from the Conference Board, a New York-based private research group, exceeded the highest estimate in a Bloomberg survey of economists. The median forecast called for an increase to 71.2.
The S&P/Case-Shiller housing index rose 10.9 percent in March from the same month in 2012, the biggest 12-month expansion since 2006. It was projected to show a 10.2 percent advance, according to the median forecast of 30 economists surveyed by Bloomberg.
The Standard & Poor’s 500 Index gained 0.6 percent and the Dow Jones Industrial Average increased 0.7 percent. European stocks also advanced, with the Stoxx Europe 600 Index climbing the most in a month.
The Bank of Japan can add to already unprecedented stimulus if necessary to drive an economic revival, Koichi Hamada, the retired Yale University professor advising Prime Minister Shinzo Abe, said in an interview. Concern that the U.S. and Japanese central banks would scale back expansionary monetary policy helped send WTI percent lower last week.
“Oil continues to take its direction from the financial markets,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The concerns about a ratcheting-back of stimulus that sent prices lower last week seem to have evaporated.”
Oil ministers from the 12-nation Organization of Petroleum Exporting Countries will meet to review the collective production target on May 31 in Vienna. OPEC kept the output target of 30 million barrels a day unchanged at its last meeting in December.
“This is the best environment for the market,” Saudi Arabian Oil Minister Ali al-Naimi told reporters today in Vienna, when asked about the balance of supply and demand. “Demand is great,” he said, as he arrived at his hotel.
OPEC will probably keep production quotas unchanged this week, said two delegates from different member countries, who asked not to be identified because the decision isn’t yet final.
European Union governments gave the go-ahead for weapons sales to the Syrian opposition yesterday, seeking to increase pressure on Bashar al-Assad’s regime after two years of civil war. The U.K., the prime mover behind the EU decision, said that it wouldn’t immediately start to supply the rebels with arms and that other economic sanctions will be prolonged by 12 months.
Russia’s Deputy Foreign Minister Sergei Ryabkov said the move could worsen the Syrian crisis and damage prospects for negotiations at a peace conference proposed for next month by Russia and the U.S.
“The lifting of the EU weapons embargo on Syria may be helping push prices higher today,” McGillian said. “This raises the prospect of a further escalation of violence.”
The Middle East accounted for 33 percent of global crude output in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. Syrian oil exports, which were never among the highest in the region, have almost completely ended. Syria borders Iraq, the second-biggest producer in OPEC.
Implied volatility for at-the-money WTI options expiring in July was 21.3 percent, compared with 20.3 percent on May 24, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 453,732 contracts as of 3:07 p.m. It totaled 368,545 contracts May 24, the lowest level since Dec. 31 and 36 percent below the three-month average. Open interest was 1.74 million contracts.
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