Crude Oil Rises for Fifth Day After U.S. Inventories Drop, Economy Expands
Crude rose for a fifth day, the longest rally in six weeks, as economic growth in the U.S. and declining stockpiles bolstered speculation demand in the world’s biggest oil consumer will increase.
Futures climbed as much as 0.3 percent after the Energy Department said U.S. crude supplies fell last week to the lowest in 10 months. The country’s gross domestic product expanded 2.6 percent in the third quarter, more than a previous estimate of 2.5 percent, the Commerce Department said yesterday.
“We are bullish on oil in the short, medium and long term,” Michael Haigh, global head of commodities research at Standard Chartered Plc in Singapore, said in an interview on Bloomberg Television. “Over the next year we’re seeing oil creeping up into the mid-$90s.”
Crude for February delivery rose as much as 31 cents to $90.79 a barrel in electronic trading on the New York Mercantile Exchange. It was at $90.71 at 3:23 p.m. Singapore time. Yesterday, the contract advanced 0.7 percent to $90.48, the highest settlement since Oct. 3, 2008.
Oil futures volume traded in New York totaled 350,573 contracts yesterday, the lowest amount since Nov. 26, the day after Thanksgiving. More than 1 million contracts changed hands on Dec. 7.
“A word of caution that when volumes traded are thin, price changes tend to be magnified,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore.
Crude, which surged 78 percent in 2009, has gained 14 percent this year as the global economic recovery increases demand and cuts stockpiles.
U.S. crude inventories fell 5.33 million barrels to 340.7 million in the week ended Dec. 17, the Energy Department said. That’s the lowest since Feb. 19. A decline of 3.4 million barrels was forecast, according to the median estimate from 14 analysts surveyed by Bloomberg News.
Supplies along the Gulf Coast, which holds almost half of U.S. refinery capacity, dropped 6.08 million barrels to 167.3 million, the lowest since Jan. 22.
Stockpiles of distillate fuels, which include heating oil and diesel, dropped 589,000 barrels to 160.7 million, the first decrease in three weeks, according to the department. Gasoline inventories increased 2.4 million barrels to 217.2 million.
Urbanization and population growth in emerging economies including China and India will spur demand for commodities in the next 20 years, according to Haigh at Standard Chartered. Global oil consumption is set to rise to 112 million barrels a day by 2030 from around 89 million currently, he said.
“Population and income growth are going to affect the demand side,” he said. “The question is where supply will come from. The marginal barrel is going to come from more expensive areas, so that explains why we get the increase in prices.”
Brent crude for February settlement rose as much as 26 cents, or 0.3 percent, to $93.91 a barrel on the London-based ICE Futures Europe exchange. Yesterday, the contract gained 0.5 percent to $93.65.
To contact the reporter on this story: Ann Koh in Singapore at firstname.lastname@example.org
To contact the editor responsible for this story: Clyde Russell at email@example.com