West Texas Intermediate crude rose as signs that economic growth is accelerating in the U.S., Germany and the U.K. signaled that fuel demand will increase.
Futures climbed after the Commerce Department said bookings for U.S. durable goods increased 4.2 percent in June. German data showed business confidence increased for a third month in July, while in the U.K,. all main industries showed expansion for the first time in three years. A government report yesterday showed that U.S. crude stockpiles dropped a fourth week while production surged to a 22-year high.
“There’s market strength because of the better economic outlook,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The durable goods numbers were positive and there were indications that the German and U.K. economies are doing better.”
WTI crude for September delivery gained 10 cents to settle at $105.49 a barrel on the New York Mercantile Exchange. Futures touched $104.08, the lowest intraday level since July 9. The volume of all futures traded was 3.9 percent below the 100-day average at 3:35 p.m.
Brent for September settlement rose 46 cents, or 0.4 percent, to end the session at $107.65 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 23 percent below the 100-day average. The European benchmark traded at a $2.16 premium to WTI, up from $1.80 yesterday. Brent dropped below WTI on July 19 for the first time since August 2010.
Bookings for goods meant to last at least three years rose in May by a revised 5.2 percent, which was bigger than initially reported, the Commerce Department report showed. The median forecast of 79 economists surveyed by Bloomberg called for a 1.4 percent advance for June.
Another report showed more people in the U.S. filed for unemployment benefits last week. Jobless claims rose by 7,000 to 343,000 in the period ended July 20, the Labor Department said.
Munich-based Ifo’s Business Climate Index advanced to 106.2, up from 105.9 in June. The institute surveys 7,000 executives in Germany to forecast business confidence.
U.K. economic growth accelerated in the second quarter. Gross domestic product increased 0.6 percent from the first quarter, when it rose 0.3 percent, the Office for National Statistics said in London today. Services, production, construction and agriculture all grew, the first time that has happened since the third quarter of 2010.
A spate of oil production and transportation disruptions is also bolstering prices, said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy. Reuters reported that Yemen’s main oil pipeline was blown up. Brazil’s Petrobras Brasileiro SA is seeking to ensure supply during a work action, the company said in e-mail. Shipments from northern Iraq to Turkey were cut.
“There are new output issues pushing prices higher,” Kilduff said. “There was a pipeline bombing in Yemen, a strike in Brazil and new disruptions in Iraq. All of these elements combined will make global supply tighter.”
Egypt’s army signaled it’s losing patience with protests in support of ousted President Mohamed Mursi. The military will change tactics when dealing with violence and terrorism in 48 hours, according to statement on Facebook.
U.S. crude stockpiles decreased 29.9 million barrels in the four weeks ended July 19, the largest four-week drop in data dating to 1982, according to an Energy Information Administration report yesterday.
Crude production rose to 7.56 million barrels a day last week, the most since December 1990, according to the EIA, the Energy Department’s statistical unit. Output has surged as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in the central part of the country.
Implied volatility for at-the-money WTI options expiring in September was 21.5 percent, down from 21.8 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 536,680 contracts as of 3:34 p.m. It totaled 604,753 contracts yesterday, 8.6 percent below the three-month average. Open interest was 1.86 million contracts.