Oil rebounded after falling for five days in New York, the longest losing streak since May, as a U.S. report showed demand for durable goods beat forecasts.
Futures gained as much as 1.2 percent after closing yesterday at the lowest in more than three months. Demand for durable goods climbed 9.9 percent last month, exceeding the median forecast of economists surveyed by Bloomberg. Equities advanced in Europe and Asia as the Nikkei reported the Bank of Japan may boost its asset-purchase plan. The S&P GSCI index of 24 commodities added 0.5 percent as the Dollar Index dropped.
“It’s a rebound, it’s the same on metals, in fact it’s quite the union on commodity prices today,” Bjarne Schieldrop, the Oslo-based head of commodity research at SEB AB, said today by phone. “There has been some positive sentiment coming out of Asia today and also there is the stronger euro versus the weaker dollar that is driving prices up.”
West Texas Intermediate for December delivery rose as much as $1.02 to $86.75 a barrel in electronic trading on the New York Mercantile Exchange. It was at $86.50 at 1:27 p.m. London time. The contract settled at $85.73 yesterday, the lowest since July 10.
Brent for December settlement added 91 cents to $108.76 a barrel on the ICE Futures Europe exchange. The contract yesterday declined for a seventh day, the longest losing streak since July 2010. The European benchmark crude was at a premium of $22.26 to WTI, compared with $22.12 yesterday.
Oil is rebounding in New York after yesterday’s drop sent the relative strength index to the lowest since June 28. Crude climbed from a nine-month low in June when the RSI slid below 30, signaling the market was oversold. Today’s reading is 34.9.
The Commerce Department may report tomorrow that U.S. gross domestic product grew at a 1.9 percent annual pace in the three months ended Sept. 30, up from 1.3 percent the previous quarter, economists forecasts showed.
“I’m looking at data in the service area in particular that could see some upside surprise to those positive estimates,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “That will be a reminder to all markets, but particularly oil markets, of the much-improved U.S. economic situation.”
Japan’s central bank will consider increasing its asset-purchase program by 10 trillion yen ($125 billion) to 90 trillion yen at an Oct. 30 policy meeting, the Nikkei newspaper reported. The U.S. Federal Reserve yesterday said it will maintain stimulus after last month committing to a third round of bond purchases.
“The price is quite oversold,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “Everybody is positive on the Japanese equity market today from expectations that the Bank of Japan may ease policies.”
Calgary-based Nexen Inc. is resuming operations at the Buzzard field in the North Sea after maintenance took longer than forecast, according to a statement.
Repairs on Royal Dutch Shell Plc’s Pernis oil refinery in the Netherlands, which is Europe’s largest, will be completed in the first half of November, the company said today in a statement on its website. The refinery had major maintenance over the last month, according to the statement.