Crude Rises for Second Day on Durable Goods Orders

West Texas Intermediate crude rose for a second day, paring the sixth decline in seven weeks, as orders for durable goods increased the most in three months and the U.S. stock markets gained.

Prices advanced 0.8 percent after the Commerce Department said bookings for goods meant to last at least three years increased 3.7 percent. The Standard & Poor’s 500 Index extended a third straight weekly gain as revenue from Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) topped estimates. WTI capped a third weekly loss as rising production boosted U.S. crude inventories.

“The strong durable goods number would suggest strong demand for oil and that’s giving the market some support,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “What the bulls are hanging onto is that we probably will get a little bit of a rally because the market is pretty oversold. The fundamentals seem to get more bearish every day from the supply side.”

WTI for December delivery gained 74 cents to settle at $97.85 a barrel on the New York Mercantile Exchange. Trading was 40 percent lower than the 100-day average. The weekly decline was 2.9 percent. Crude is down 13 percent from the 2013 high of $112.24 reached in intraday trading on Aug. 28.

Brent for December settlement declined 6 cents to $106.93 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to WTI narrowed to $9.08 from yesterday’s $9.88. The spread was $11.67 on Oct. 22, the widest since April.

Forecast Exceeded

The gain in durable goods orders exceeded the 2.3 percent advance that was forecast by economists surveyed by Bloomberg. A gauge of demand for capital equipment slumped 1.1 percent, a sign companies pulled back ahead of the partial federal government shutdown.

“The durable goods report is good,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Pushing back above $100 in the coming days is going to be difficult considering the idea that we still have a lot of supplies.”

The S&P 500 (SPX) rose 0.2 percent to extend the October advance to 4.4 percent. Amazon.com surged as much as 11 percent as consumers flocked to the largest online retailer ahead of the holiday shopping season. Microsoft jumped as much as 7.6 percent.

“We are moving with the equities,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago.

Rising Inventories

U.S. crude inventories climbed 5.25 million barrels last week to 379.8 million, the most since June 28, the Energy Information Administration said on Oct. 23. They have climbed 24.2 million barrels, or 6.8 percent, in the last five weeks, according to the EIA, the Energy Department’s statistical arm.

Production grew 6.3 percent last week to 7.9 million barrels a day, the most since March 1989. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies in shale formations in North Dakota, Texas and other states.

“Inventories are pretty bearish,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “We still have more downside.”

Saudi Arabia’s crude exports are “starting to go down” as the largest member of the Organization of Petroleum Exporting Countries seeks to reduce the chance of a glut, said Roy Mason, the founder of Oil Movements. Shipments from the group, excluding Angola and Ecuador, will slide 0.5 percent to 23.8 million barrels a day in the four weeks to Nov. 9, according to the Halifax, England-based tanker-tracking consultant.

Gasoline Slips

Gasoline fell as the reopening of Scotland’s only refinery may increase supplies available for export to the U.S. from Europe. Ineos Group Holdings SA announced today it will immediately restart Scotland’s Grangemouth petrochemical site and start up the adjacent refinery after forging a deal with the unionized workforce.

November gasoline slid 0.25 cent to $2.5871 a gallon on the Nymex, extending the weekly loss to 3.2 percent.

Implied volatility for at-the-money WTI options expiring in December was 18.8 percent, down from 20.6 percent yesterday, according to data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 317,820 contracts as of 2:35 p.m. It totaled 529,559 contracts yesterday, 9.5 percent lower than the three-month average. Open interest was 1.78 million contracts.

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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