Oil fell in New York as traders sold contracts to lock in profits after crude surged yesterday to close at a two-year high on signs fuel demand is climbing as the global economy improves.
Futures also retraced part of yesterday’s 1.4 percent gain as Chinese equities fell amid speculation the government may tighten monetary policy further in the world’s biggest energy user. The U.S. may have added 145,000 non-farm jobs in November, according to a survey before a report later today, reinforcing optimism the economy of world’s largest oil consumer continues to improve.
“Oil is now at the top end of the range,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “It’s tough resistance here. Oil is coming back a little bit because of profit taking. The market is going to be focused on what happens tonight with the unemployment number.”
The January contract declined as much as 42 cents, or 0.5 percent, to $87.58 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $87.82 at 10:22 a.m. Singapore time. Yesterday, it added $1.25 to $88, the highest settlement since Oct. 8, 2008. Oil has climbed 4.8 percent so far this week.
Crude gained yesterday as the dollar dropped against the euro after the European Central Bank said it will keep offering lenders as much cash as they want through the first quarter. Prices also climbed as the National Association of Realtors said yesterday pending home sales increased 10 percent in October, bolstering optimism that the economy is improving.
Brent crude oil for January settlement was at $90.55 a barrel, down 14 cents, on the London-based ICE Futures Europe exchange. The contract increased $1.82, or 2.1 percent, to end the session at $90.69, the highest close since Oct. 1, 2008.
Brent for January is trading at a 3 cent premium to the February contract, a market situation known as backwardation, suggesting that prompt supplies are more in demand than later deliveries. This is the first time it has occurred since April 2008.