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Brent Trades Near Three-Month High on Economic Confidence

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Jan. 29 (Bloomberg) -- Brent crude traded near a three-month high after reports from Germany to South Korea signaled increased confidence in the global economic recovery, potentially spurring oil demand.

Futures were little changed after rising for four of the last five sessions. German consumer confidence increased, following gains in business sentiment in South Korea and Australia, reports showed. U.S. durable goods orders last month rose by more than the highest forecast in a Bloomberg survey, according to Commerce Department data yesterday. Federal Reserve policy makers start a two-day meeting today to discuss continuing asset purchases to boost the economy.

“The focus is very much on the continuing improved economic data,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by phone from Copenhagen. The North Sea crude may advance to $114.50 a barrel if it breaks above last week’s highs, he said.

Brent for March settlement advanced as much as 21 cents, or 0.2 percent, to $113.69 a barrel on the ICE Futures Europe exchange in London. That was close to the peak of $113.84 achieved on Jan. 25, or the highest intraday level since Oct. 17. Futures fell 9 cents to $113.39 as of 12:40 p.m. local time. The volume of all contracts traded was 30 percent above the 100-day average.

West Texas Intermediate crude for March delivery rose 9 cents to $96.53 a barrel in electronic trading on the New York Mercantile Exchange. Futures closed at $96.44 yesterday, the highest since Sept. 17. The average volume of all contracts traded at that time was 17 percent below the 100-day average. The European benchmark grade was at a premium of $16.83 to WTI, down from $17.04 yesterday.

German Confidence

German consumer confidence will rise next month due to a stable labor market and higher income expectations, Gfk SE said.

The Nuremberg-based market research company forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will rise to 5.8 from a revised 5.7 in January. Economists expected a gain to 5.7 from the initial January reading of 5.6, according to the median of 34 estimates in a Bloomberg News survey.

A South Korean index of manufacturers’ expectations for February increased to 72 from 70 for January, the central bank said today in a statement. An index of Australian business confidence rose to 3 in December from minus 9, according to a National Australia Bank Ltd. survey of more than 500 companies, the biggest improvement in sentiment since October 2001.

Durable Goods

“Oil prices are continuing to profit from the brightening of market sentiment,” Carsten Fritsch, a commodity analyst at Commerzbank AG in Frankfurt, said by e-mail.

Bookings for goods meant to last at least three years advanced 4.6 percent in December from the prior month, the Commerce Department report showed yesterday in Washington. The median forecast of 76 economists surveyed by Bloomberg called for a 2 percent gain in orders. Estimates ranged from a drop of 1.4 percent to a 4.5 percent increase.

“You are looking at a trend over the last few months, with durable goods orders being consistent with a lot of the other figures, that is pointing toward a decent, moderate growth level in the U.S.,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

The Fed is buying as much as $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The Federal Open Market Committee last month decided to add $45 billion in monthly purchases of Treasury notes to its program. The FOMC set no limit on the size or duration of the bond purchases.

Crude Inventories

U.S. crude inventories probably climbed 2.7 million barrels last week, according to the median estimate of seven analysts in a Bloomberg News survey before an Energy Department report tomorrow. The industry-funded American Petroleum Institute will release separate stockpile data today.

Gasoline supplies probably increased 1 million barrels last week and distillate stockpiles, a category that includes heating oil and diesel, dropped 1 million barrels, according to the Bloomberg survey.

Brent crude may climb to almost $115 a barrel in the next two weeks after the most recent closes were above the previous highest levels, according to technical analysis by Futurestechs.com Ltd. The next upside target is $114.95, near the highs in mid-October, Liam Roberts, technical analyst at the Billericay, England-based researcher, said by phone today.

The oil market is well-balanced and the Organization of Petroleum Exporting Countries doesn’t “envision a price collapse” in 2013, OPEC Secretary-General Abdalla El-Badri said yesterday at a conference at Chatham House in London.

There is no need for OPEC to cut supply if economies are struggling, El-Badri said. Resource availability to meet growing demand “is not an issue,” he said. OPEC meets next on May 31.

OPEC, which supplies about 40 percent of the world’s oil, reduced output by 465,000 barrels a day in December to 30.4 million a day, the lowest level since October 2011, led by a reduction in Saudi Arabia, the group said in a Jan. 16 report.

To contact the reporter on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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