Oil Heads for Third Weekly Gain on Obama Job Plan, Storm in Gulf of Mexico
Oil headed for a third weekly gain as investors bet President Barack Obama’s job-creation plan will support demand for fuel and as producers in the Gulf of Mexico evacuated workers ahead of Tropical Storm Nate.
New York futures climbed as much as 0.5 percent, erasing a drop of 0.8 percent, after Obama asked Congress to pass a proposal that would inject $447 billion into the economy of the world’s biggest crude user. Prices slid yesterday after Federal Reserve Chairman Ben S. Bernanke stopped short of specifying measures the central bank may use to bolster growth when policy makers meet this month. Companies including BP Plc removed staff in the Gulf, home to 27 percent of U.S. oil output.
“In the next month or so, it’s going to be very uncertain,” said Jeremy Friesen, a Hong Kong-based commodity strategist at Societe Generale SA. “We could see prices continuing to sell off if the market doesn’t like what the Fed says. But if the market likes it, the physical crude market is reasonably tight, so that should support prices.”
Oil for October delivery gained as much as 45 cents to $89.50 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.23 at 3:13 p.m. Singapore time. Prices are 3.2 percent higher this week and up 20 percent the past year.
Brent oil for October settlement was up 40 cents, or 0.4 percent, at $114.95 a barrel on the London-based ICE Futures Europe Exchange. The European benchmark contract was at a premium of $25.72 to U.S. futures, compared with a record settlement of $26.87 on Sept. 6.
Tropical Storm Nate is expected to become the third hurricane of the Atlantic season today. Top winds are 70 miles (113 kilometers) per hour, just under the threshold of 74 mph needed to be upgraded, according to an advisory from the U.S. National Hurricane Center before 1 a.m. Central Daylight Time.
BP and Apache Corp. said they were beginning evacuations of some workers in the Gulf because of Nate. The BP decision affects non-essential workers at the Atlantis, Holstein and Mad Dog platforms, according to a message on a telephone hotline. Apache’s removal of non-essential workers from facilities in the far western Gulf hasn’t affected production, Bill Mintz, a company spokesman, said in an e-mail.
U.S. crude supplies fell 3.96 million barrels to 353.1 million last week as Tropical Storm Lee shut platforms, a report from the Energy Department showed yesterday. They were forecast to drop 2 million barrels, according to the median estimate of 14 analysts surveyed by Bloomberg News. Gasoline stockpiles climbed 199,000 barrels, compared with a median forecast for a drop of 1.4 million barrels.
Bernanke told economists yesterday that the Fed has measures at hand and is “prepared to employ these tools as appropriate.” Obama, speaking before a joint session of Congress, demanded that lawmakers act on a plan that would boost spending, stem layoffs and cut taxes.
“The price rise you’ve seen in WTI relates more to Obama’s speech than the weather,” said Friesen. The energy department report “was fairly supportive for crude,” he said.
Oil may fall next week amid heightened concern that global economic growth is slowing, a Bloomberg News survey showed.
Fourteen of 28 analysts, or 50 percent, forecast oil will decline through Sept. 16. Seven respondents, or 25 percent, predicted prices will increase and seven estimated there will be little change during the period. Last week 50 percent of surveyed analysts projected a drop.
To contact the editor responsible for this story: Alexander Kwiatkowski at firstname.lastname@example.org