May 27 (Bloomberg) -- Oil headed for a weekly gain in New York on speculation that the global economic recovery will sustain demand for fuel.
Crude rose as much as 0.8 percent after Group of Eight leaders said the world economy is gaining strength and as a weakening dollar boosted the appeal of commodities. Futures narrowed their gains after a report showed European confidence in the economy weakened for a third straight month in May. The Organization of Petroleum Exporting Countries may raise output quotas to meet global demand, according to JPMorgan Chase & Co.
“High commodity prices are starting to take their toll on growth,” Christophe Barret, a London-based oil analyst at Credit Agricole SA, wrote in a report today. “Oil demand data is weak, in particular for gasoline demand.”
Crude for July delivery on the New York Mercantile Exchange was at $100.48 a barrel, up 25 cents, at 12:35 p.m. London time, after rising as much as 80 cents to $101.03. Futures yesterday fell $1.09 to $100.23, the lowest settlement since May 24. Prices are up 1 percent this week and 10 percent this year.
Brent oil for July settlement was up 8 cents at $115.13 a barrel on the London-based ICE Futures Europe exchange. The contract yesterday rose 12 cents, or 0.1 percent, to $115.05, the highest closing price since May 10.
U.S. GDP Growth
New York futures slumped yesterday after a report showed U.S. gross domestic product expanded at a 1.8 percent annual rate in the first quarter, slower than the 2.2 percent estimated in a Bloomberg News survey of economists. U.S. jobless claims unexpectedly rose last week. The dollar fell 0.6 percent to $1.4231 against the euro today, before a report that may show growth in U.S. consumer spending slowed.
“The dollar selloff is pushing commodities higher,” said Andrew Johnston, a London-based commodities trader at One Financial Markets.
Group of Eight leaders, meeting at a two-day summit that ends today in Deauville, France, said a strengthening global economy will pave the way to cuts in the debt built up in the recession that followed the 2008 financial crisis.
“The global recovery is gaining strength and is becoming more self-sustained,” according to a draft statement prepared for the leaders.
OPEC is likely to increase production quotas to 27 million to 27.5 million barrels a day when it meets in Vienna June 8, JPMorgan said in a report e-mailed today.
Goldman Sachs Group Inc. boosted its 12-month prediction for Brent crude to $130 a barrel from $107, analysts led by Jeffrey Currie said in a report on May 23. Barclays’ Sen said yesterday its $102-a-barrel forecast for this year “may yet turn out to be conservative,” partly because of concerns about supply from non-OPEC members.
Crude may rise next week after Goldman and Morgan Stanley increased their price projections, a Bloomberg News survey showed. Fourteen of 36 analysts, or 39 percent, forecast oil will climb through June 3. Twelve respondents, or 33 percent, predicted prices will decline and 10 estimated little change. Last week, 42 percent of respondents said futures would gain.
Brent has advanced 21 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Iran and Syria. Hundreds of Yemeni families fled gun battles in the capital and the U.S. State Department urged Americans to leave the country while commercial transportation is available.
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