West Texas Intermediate crude rose to its highest in two weeks amid speculation U.S. unemployment and manufacturing data signaled the world’s biggest oil consumer will sustain its economic growth.
Futures rose as much as 1 percent in New York and have gained 2.1 percent since Jan. 10. U.S. jobless claims fell last week to the lowest since November while a factory index for this month increased, according to separate reports yesterday. Industrial production data for December is due today. Prices may retreat next week, according to a Bloomberg News survey. Morgan Stanley said it sees “downside risk” for crude from rising supply.
“There’s still a good case for an acceleration in U.S. economic growth, that, even if energy efficiency is rising, will lead to higher oil demand in the U.S.,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo.
WTI for February delivery was at $94.64 a barrel in electronic trading on the New York Mercantile Exchange, up 68 cents, at 1:31 p.m. London time. It earlier reached $94.88, the highest since Jan. 3. The contract declined 21 cents to $93.96 yesterday. The volume of all futures traded was about 20 percent below the 100-day average.
Brent for March settlement rose 46 cents to $106.21 a barrel on the London-based ICE Futures Europe exchange. Earlier it fell to $105.44, the lowest for the front-month contract since Nov. 11. The February contract expired yesterday after losing 4 cents to $107.09.
The European benchmark crude was at a premium of $11.50 to WTI for March, compared with a front-month gap between the two February contracts of $13.13 at settlement yesterday. The smaller spread today reflects the shift to March Brent contracts, which were at a discount to February futures of the grade.
Brent’s premium to WTI has shrunk with a recovery in production from Libya, which restarted its Sharara field on Jan. 4, following talks with protesters. The group demonstrating there will extend by a week a deadline for the government to satisfy their demands before initiating a new shutdown, Mustafa Lamin, their spokesman, said by phone yesterday.
WTI rose 1.7 percent on Jan. 15, the most this year, after government data showed U.S. crude stockpiles shrank to the lowest level since March 2012 in the seven days ended Jan. 10. Futures decreased in two prior weeks amid rising fuel inventories and weaker demand.
U.S. jobless claims dropped by 2,000 to 326,000 last week, from a revised 328,000 in the prior period, the Labor Department said yesterday. The Federal Reserve Bank of Philadelphia’s factory index climbed to a three-month high for January as sales and employment accelerated.
WTI may fall next week as U.S. crude output increases and fuel consumption declines, according to a Bloomberg News survey. Fourteen of 34 analysts and traders, or 41 percent, forecast futures will drop through Jan. 24. Thirteen respondents projected an advance and seven said there will be little change.
“Despite a more upbeat macro picture, we see more downside risk to energy,” Adam Longson, a commodity analyst at Morgan Stanley in New York, said in a report today. “On oil, supply is likely to outpace demand in light of growing production” in the U.S., Brazil and Kazakhstan.
The Organization of Petroleum Exporting Countries said yesterday it pumped the least amount of oil in December since May 2011.
OPEC, responsible for 40 percent of the world’s oil supply, said production from its 12 members slid by 20,000 barrels a day to 29.44 million a day in December amid output losses in Iraq and Saudi Arabia. That’s less than the average 29.6 million a day the group predicts will be required in 2014 and below the 30 million ceiling it reaffirmed last month.