Oil advanced a seventh day, the longest winning streak since January 2010, on signs of economic recovery from the U.S. to Germany and concern escalating tension with Iran threatens crude supplies.
Futures climbed from the highest close in more than nine months and headed for a third weekly gain. U.S. jobless claims held at the fewest since March 2008, while South Korean consumer confidence increased to the highest level in three months and Germany’s gross domestic product grew 1.5 percent from a year ago, an eighth quarter of expansion. Oil may rise next week as sanctions on Iran tighten, according to a Bloomberg News survey.
“Downside risks from a complete macroeconomic meltdown are receding fast,” said Paul Horsnell, London-based head of commodities research at Barclays Plc. “However, geopolitical risks are on the rise, with the escalating tension about Iran manifesting itself in a series of proxy wars.”
Oil for April delivery increased as much as 0.8 percent to $108.70 a barrel in electronic trading on the New York Mercantile Exchange and was at $108.26 at 1:09 p.m. London time. The contract yesterday gained 1.5 percent to $107.83, the highest close since May 4. Prices are 4.9 percent higher this week and up 11 percent the past year.
Brent oil for April settlement was at $123.83 a barrel, up 21 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded WTI was at $15.57, compared with $15.79 yesterday. It reached a record of $27.88 on Oct. 14.
U.S. initial unemployment claims were 351,000 last week, according to Labor Department data yesterday. South Korea’s sentiment index rose to 100 in February from 98 in January, the Bank of Korea said in an e-mailed statement today. Germany’s economy expanded year-on-year in the fourth quarter while contracting 0.8 percent from the third quarter, data from the Federal Statistics Office in Wiesbaden showed.
“The data is consistent with the overall picture of moderate economic growth that has now been in place for quite a while,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The Iranian situation is a large one. Markets react to the possibility of supply-side risk or a drop in supply.”
U.S. crude stockpiles climbed 1.6 million barrels last week, data from the Energy Department showed. They were forecast to increase 1.35 million, according to the median of 10 analyst estimates in a Bloomberg News survey. Gasoline supplies fell 649,000 barrels, compared with a projected 250,000 barrel gain.
Goldman Sachs Group Inc. said this week that West Texas Intermediate crude will rise this year, even as the highest U.S. oil production in nine years threatens to build stockpiles. The glut will be relieved in June, when flows through the Seaway pipeline are reversed, giving producers in Canada and North Dakota direct access to refineries on the Gulf coast, it said in a Feb. 22 report.
“The positive tone helped the crude oil market shake off weekly U.S. EIA inventory data that showed a larger-than-expected build,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. “While there was a level of concern that the 4-week moving average for total U.S. product demand slipped to its lowest level since April 1997, energy markets appear focused on a potentially tight supply situation in the Middle East.”
Turkiye Halk Bankasi AS, the Turkish bank that handles payments for Iranian oil, may stop processing transactions for supplies into Turkish refineries from July, according to an official at Tupras Turkiye Petrol Rafinerileri AS, which operates four plants.
Tupras won’t be able to use the bank after June 30 without a U.S. waiver, the official said yesterday, declining to be identified because of company policy. State-run Halk complies with all international regulations and standard practices on Iran, an official at the Ankara-based lender said by phone yesterday, declining to be identified for the same reason.
The U.S. has offered to help India, which also uses Halk for payments to Iran, get alternative supplies for the crude, according to three people with knowledge of the matter. The U.S. may help broker deals with suppliers such as Iraq and Saudi Arabia, the people said, declining to be identified because the information is confidential.
Indian refiners have been told that Halk’s services may soon be terminated, four people with knowledge of the matter said Jan. 10.
Iran, the second-biggest member in the Organization of Petroleum Exporting Countries, produced about 3.5 million barrels of oil a day last month, according to analysts’ estimates compiled by Bloomberg. Saudi Arabia had output of 9.7 million barrels a day and Iraq had 2.8 million.