Brent oil rose in London as a debt sale by Spain bolstered confidence in Europe’s recovery, countering concern that rising U.S. inventories will leave the market over-supplied.
Brent climbed as much as 1 percent after Spain sold 2.54 billion euros ($3.3 billion) of bonds, just above the maximum target for the auction. U.S. supplies gained 3.9 million barrels last week, yesterday’s Energy Department data showed. The median forecast in a Bloomberg News survey of analysts was for an increase of 1.8 million barrels. In New York, prices slipped after Labor Department data showed more Americans filed for unemployment benefits last week than forecast.
“Market sentiment is better today, as equity markets and the euro advance on expectations the worst is over and most of negative news is priced in,” said Eugen Weinberg, head of commodities research at Commerzbank AG, who predicts U.S. crude prices will average $104 a barrel this quarter. “U.S. inventories increased beyond expectations on weak demand and high supplies.”
Brent oil for June settlement rose as much as $1.15 to $119.12 a barrel on the London-based ICE Futures Europe exchange and was at $118.36 at 1:38 p.m. London time. The European benchmark contract’s premium to West Texas Intermediate was at $15.37, up from $14.85 yesterday.
Crude for May delivery on the New York Mercantile Exchange was at $102.50 a barrel, down 17 cents. It slid 1.5 percent yesterday, the most since April 4. The more-actively traded June contract was up 22 cents at $103.34 a barrel. Front-month prices are 4.1 percent higher this year.
Jobless claims fell by 2,000 to 386,000 in the week ended April 14 from a revised 388,000 the prior period that was higher than initially estimated, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg News called for a drop to 370,000.
Oil in New York has technical support along its 100-day moving average, around $101.93 a barrel today, according to data compiled by Bloomberg. Futures have been trading above this indicator for the past week. Buy orders tend to be clustered near chart-support levels.
U.S. crude stockpiles climbed to 369 million barrels, the highest level since May 27, the Energy Department data showed. Refineries operated at less than 85 percent of capacity for a second week, according to the report.
“The trend is there for inventories to build but we haven’t seen dramatic decreases in the price of the commodity,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “The market is trying to work out if we’re in a recovery mode or slowing. It’s a bit quiet in Iran and the Middle East, but it’s still there.”
Gasoline inventories decreased 3.7 million barrels, compared with a median forecast for a decline of 1.1 million barrels in the Bloomberg survey. Gasoline for May delivery slid yesterday 3.13 cents, or 1 percent, to $3.2027 a gallon on the New York Mercantile Exchange yesterday. That’s the lowest closing price in seven weeks.
Distillate inventories, a category that includes heating oil and diesel, dropped 2.91 million barrels last week, the Energy Department said. Analysts surveyed by Bloomberg predicted they would shrink by 125,000 barrels.
Iraq’s deputy prime minister for energy said the Strait of Hormuz is unlikely to close and there is no shortage of oil.
The oil market is balanced and there is no need for OPEC to change its output quota if demand remains at current levels, Iraq’s Hussain al-Shahristani said in an interview in London. Ministers from the Organization of Petroleum Exporting Countries are scheduled to meet June 14 in Vienna.
Iraq is hosting an international diplomatic gathering next month to discuss Iran’s alleged efforts to develop nuclear weapons as sanctions restrict buyers of its crude. Iran has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil, in response to an embargo.
Japan’s crude imports slid 2.4 percent in the fiscal year ended March, the finance ministry said today. Purchases from overseas fell to 210 million kiloliters, while the cost climbed 22 percent to 11.9 trillion yen ($146 million). Japan accounted for 5 percent of the world’s oil consumption in 2010, according to BP Plc’s Statistical Review of World Energy.