Crude oil rose for a second day and was headed for a weekly gain in New York after stronger-than-forecast economic growth figures for the euro zone fanned speculation that fuel demand in Europe will increase.
Futures climbed as much as 1.7 percent to more than $100 a barrel. Gross domestic product growth in the 17-nation euro region accelerated to 0.8 percent from 0.3 percent, the European Union’s statistics office said, beating the 0.6 percent median forecast in a Bloomberg survey. The Bank of Korea unexpectedly kept interest rates unchanged after two increases this year.
“Eurozone GDP figures helped the gains and the Bank of Korea is holding rates, diminishing some concerns about monetary tightening in Asia,” said Michael Hewson, London-based market analyst at CMC Markets.
Crude for June delivery gained as much as $1.73 to $100.70 a barrel in electronic trading on the New York Mercantile Exchange and traded at $100.40 at 1:40 p.m. London time. Prices are up 3.3 percent this week, following last week’s 15 percent plunge, and have risen 35 percent in the past year.
Brent oil for June settlement rose $1.72, or 1.5 percent, to $114.70 a barrel on the London-based ICE Futures Europe exchange. The contract is up 5.1 percent this week.
The oil market is “structurally bullish,” Jeffrey Currie, the London-based head of commodity research at Goldman Sachs Group Inc., said in an interview.
European Economic Growth
“Long-term and medium-term we’re still structurally bullish,” Currie said today in London. Volatility in oil prices will begin to stabilize next month and prices are likely to be higher in 12 months, he said.
Germany and France powered economic growth in the euro area in the first quarter as booming exports fueled domestic spending in the bloc’s core, offsetting turmoil sparked by sovereign debt woes in Greece, Ireland and Portugal.
German GDP jumped 1.5 percent from the fourth quarter and the French GDP rose 1 percent, exceeding economists’ median forecasts of 0.9 percent and 0.6 percent respectively. Austria’s economy grew by 1 percent and the Netherlands’ by 0.9 percent.
Rising floodwaters on the Mississippi River may affect 10 percent of Louisiana’s onshore crude oil production. Opening the state’s Morganza spillway to alleviate flooding may affect 2,264 oil wells that produce 19,278 barrels a day, said Matt Ross, communications director for the Louisiana Oil & Gas Association.
About 150 companies are preparing for an onslaught of water should the spillway be opened, Ross said. The work includes removing lease equipment and adding markers to wells.
Iraq may raise its oil production capacity to 7 million barrels a day by 2020 “if all goes well,” thereby adding to OPEC’s spare capacity, said Leo Drollas, London-based chief economist at the Centre for Global Energy Studies.
“If all goes well, by 2015 there will be this spare capacity problem,” he said today at the Platts Crude Oil Markets conference in London. He added that the 2020 forecast for Iraq is “optimistic.”
Brent, the European benchmark, traded at a premium of $14.38 a barrel to U.S. futures. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21. It averaged 76 cents last year.
Crude may decline next week as U.S. inventories increase and fuel consumption drops, a Bloomberg News survey showed.
Nineteen of 38 analysts, or 50 percent, forecast oil will fall through May 20. Ten respondents, or 26 percent, predicted prices will advance and nine projected little change. Last week, 50 percent of respondents said futures would decline.