March 28 (Bloomberg) -- West Texas Intermediate oil climbed for a fifth day, capping the longest rally this year, as the U.S. economy grew at a faster pace than previously estimated in the fourth quarter.
Prices reached a six-week high as gross domestic product rose at a 0.4 percent annual rate, up from prior estimate of 0.1 percent, the Commerce Department reported today in Washington. Oil demand in the U.S., the biggest crude-consuming country, increased by the most since December in the seven days ended March 22, the Energy Information Administration said yesterday. WTI’s discount to Brent shrank to the smallest since July.
“GDP is better than earlier estimates and a strong economy is bullish for oil,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It looks like the spread will keep contracting.”
WTI for May delivery gained 65 cents, or 0.7 percent, to $97.23 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 14. The rally since March 21 was the longest since Dec. 20 and brought crude’s advance for the quarter to 5.9 percent.
The volume of all futures traded was 26 percent below the 100-day average at this time of day at 3:26 p.m. Prices increased 3.8 percent this week, a fourth consecutive rally. They were 5.6 percent higher this month. The market will be closed tomorrow for Good Friday.
Brent for May settlement rose 33 cents, or 0.3 percent, to end the session at $110.02 a barrel on the London-based ICE Futures Europe exchange. The volume of all contracts traded was 14 percent below the 100-day average. Prices gained 2.2 percent this week. They fell 1.2 percent in March and 1 percent in the quarter.
The European benchmark grade’s premium to WTI shrank $12.79 a barrel, the narrowest since June 25.
The 0.4 percent rate of economic growth in the fourth quarter followed a 3.1 percent pace in the third, revised Commerce Department figures showed. The slowdown was because of the biggest slump in military spending since 1972 and a cut in the rate of inventory building.
“GDP is better than it was,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “The spread still has further room to contract. It could easily trade back down to $5 within the next 12 to 24 months.
The U.S. accounted for 21 percent of global oil consumption in 2011, according to BP Plc’s Statistical Review of World Energy.
Petroleum demand in the U.S. increased 6.2 percent to 18.9 million barrels a day, the most since Feb. 8, the EIA, the Energy Department’s statistical arm, said yesterday.
Oil also gained as OPEC crude production slipped to a 16-month low in March as output from Nigeria dropped to the least in more than three years, a Bloomberg survey showed.
Output in the 12-member Organization of Petroleum Exporting Countries declined 70,000 barrels, or 0.2 percent, to an average 30.554 million barrels a day this month from a revised 30.624 million in February, the survey of oil companies, producers and analysts showed.
Futures fell as much as 0.3 percent in intraday trading as more Americans than projected filed applications for unemployment benefits. Jobless claims increased 16,000 to 357,000 last week, the highest level in more than a month, the Labor Department said. Economists surveyed by Bloomberg forecast an increase to 340,000.
‘‘Although the overwhelming evidence appears to be that there are improvements in the economy, the picture isn’t a robust one,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The jobless claims took some of the support out of the market. Today is the last trading day of the quarter and you’ve got some profits and you probably want to take them.”
WTI may rise toward $100 after the May contract settled above $95.55 a barrel, a key Fibonacci level, for a third day, according to technical analysis from Bill Baruch, a senior market strategist at Iitrader.com, a commodity-trading firm in Chicago. The figure is the 61.8 percent retracement level from a March 4 low of $89.79 on a three-month Fibonacci study.
The price may test $100 if it breaches $97.92, the Feb. 20 intraday high, Baruch said yesterday.
Implied volatility for at-the-money WTI crude options expiring in May was 16.1 percent, up from 16 percent yesterday. The figures have slipped from 24.7 percent on Feb. 21.
Electronic trading volume on the Nymex was 339,489 contracts as of 3:27 p.m. local time. It totaled 458,517 contracts yesterday, 18 percent below the three-month average. Open interest was 1.71 million contracts.
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