West Texas Intermediate crude gained for the first time in 10 days on speculation a growing U.S. economy will increase demand.
Prices snapped a nine-day decline, the longest losing stretch since 2009. U.S. economic growth will exceed 3 percent over a nine-month period, a Bloomberg survey of economists showed. Oil demand rose to a one-month high in the four weeks ended July 4, government data showed yesterday. Prices dropped earlier as supply concerns eased in Iraq and Libya.
“We’ve been down for so many days in a row here and we are due for a bounce,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We have a good economy underpinning demand.”
WTI for August delivery gained 64 cents, or 0.6 percent, to end at $102.93 a barrel on the New York Mercantile Exchange. The contract slid $1.11 to $102.29 yesterday, the lowest close since May 16. The volume of all futures traded was 15 percent above the 100-day average.
WTI is trading near the highest level for this time of year since 2008. Prices are more than $20 higher than the 10-year average of $79.93.
Brent for August settlement advanced 39 cents, or 0.4 percent, to $108.67 a barrel on the London-based ICE Futures Europe exchange. Volume was 60 percent above the 100-day average. The European benchmark crude traded at a premium of $5.74 to WTI on ICE, down from $5.99 yesterday.
Front-month Brent traded at a discount to the second month. The so-called contango, which started on July 8, is the first since April 15. Contango typically reflects that immediate supplies are outpacing demand.
U.S. gross domestic product will expand 3.1 percent from July through December following a 3.3 percent advance last quarter, according to the median forecast of 74 economists polled from July 3 through July 9. It would be the first time since 2004-2005 that GDP has sustained such gains over an extended period.
Jobless claims declined by 11,000 to 304,000 in the week ended July 5, the fewest in more than a month, the Labor Department reported today.
Four-week average oil demand rose to 19 million barrels a day in the period ended July 4, the highest level since May 30, the Energy Information Administration reported yesterday.
“We had so many down days in a row and it’s time for the market to rebound,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Demand still looks pretty solid.”
Crude also gained as U.S. stocks pared losses amid speculation that an early selloff on signs of financial stress in Portugal was overdone.
“The stock market is pushing back and oil is running away along with that,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “People are starting to realize that the market is a little bit oversold. Demand’s been strong.”
WTI and Brent were down earlier. Libya’s production rose today to 350,000 barrels a day from 325,000 yesterday as output from the western Sharara field climbed, National Oil Corp. spokesman Mohamed Elharari said by phone in Tripoli. The nation’s output will rise toward 1 million barrels a day after Sharara restarted and the Es Sider and Ras Lanuf terminals resume exports, according to estimates from Petromatrix GmbH, a Vienna-based consulting firm.
The fighting in Iraq, OPEC’s second-largest oil producer, hasn’t spread to the south, home to more than three-quarters of its crude output. The risk of civil war flared last month after the Sunni al-Qaeda breakaway, now known as the Islamic State, seized Mosul on June 10 and advanced towards Baghdad. WTI settled at $107.26 on June 20, the highest since September 2013.