Oil rose above $75 a barrel for the first time in two weeks as U.S. data signaled that the economic recovery is gathering pace and may revive fuel demand.
Oil gained the most in eight months yesterday after China said it’s maintaining European assets and denied a report it’s reviewing euro holdings. The Commerce Department reported the U.S. economy grew for a third consecutive quarter and the Labor Department said jobless claims declined. OPEC’s output advanced to a 17-month high this month, according to a Bloomberg survey.
“There’s a number of reasons for the strength in oil, with good demand in Asia absorbing the overproduction from OPEC, and great data out of the U.S.,” said Robert Montefusco, senior broker with Sucden Financial in London.
Crude oil for July delivery gained as much as $1.17, or 1.6 percent, to $75.72 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest since May 13. It was at $75.28 at 1:02 p.m. London time. Brent crude for July settlement traded at $75.42 a barrel, up 76 cents, on the ICE Futures Europe exchange.
Contracts in New York regained their typical premium over Brent yesterday for the first time since April 9 as inventories at the U.S. storage hub in Oklahoma snapped a nine-week advance.
Yesterday, New York futures advanced $3.04, or 4.3 percent, to settle at $74.55. That’s the biggest daily gain since Sept. 30. Futures are poised for a weekly gain of 7 percent, their largest since the week ended Feb. 19.
“It’s a macro story at the moment. The news has been a little better in recent days,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “China said a report that it was reviewing its euro-zone debt exposures was baseless, so that provided some impetus. The EIA data released earlier this week showed that the overall level of U.S. oil demand was pretty strong.”
U.S. Economy Expands
U.S. GDP increased by an annual rate of 3 percent in the first quarter. It was a slower pace than the 3.2 percent gain calculated last month and less than the 3.4 percent median estimate of 79 economists surveyed by Bloomberg News.
Initial jobless claims fell by 14,000 to 460,000 in the week ended May 22. Economists had forecast that jobless claims would drop to 455,000, according to the median estimate of a separate Bloomberg survey.
The Organization for Economic Cooperation and Development forecast this week that the global economy will expand 4.6 percent this year and 4.5 percent in 2011, compared with an average of 3.7 percent during the decade through 2006 as growth in emerging economies outpaces debt-burdened developed nations.
The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world’s oil, increased crude-oil output to by 187,000 barrels a day in May to a 17-month high of 29.372 million per day, a Bloomberg News survey showed.
Oil also climbed as President Barack Obama said he is extending a moratorium on deep-water oil drilling permits, delaying proposed exploration in the Arctic off Alaska and canceling a plan to search for oil and gas off the coast of Virginia. The move, which could curb long-term supply, comes as a presidential commission studies the Gulf of Mexico oil spill.
“This is a bullish statement for the price of oil, because the U.S. is the leading consumer,” said Mike Sander, an investment adviser a Sander Capital Advisors in Seattle. “If we are not trying to find more oil on our shores, then we have to import more.”
Total fuel demand rose 0.6 percent to 19.7 million barrels a day in the week ended May 21, a report from the Energy Department showed May 26.