Crude Rises as U.S. Durable Goods Orders Gain
West Texas Intermediate crude rose for a second day as U.S. durable goods orders gained more than forecast in May and on expectations that crude stockpiles fell last week.
Futures increased 14 cents as bookings for goods meant to last at least three years climbed 3.6 percent in a Commerce Department report from Washington. Crude inventories probably shrank by 1.75 million barrels, a Bloomberg survey showed before a government report tomorrow. Volume exceeded the three-month daily average for a fifth day.
“The durable goods number is better than expected and it looks like the economy is improving,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There are expectations that you are going to see a draw in crude stocks. It looks like oil wants to go higher right now.”
WTI for August delivery settled at $95.32 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 36 percent higher than the 100-day average for the time of day at 4:54 p.m. Prices have slipped 2 percent this quarter, curbing the gain in 2013 to 3.7 percent.
Futures were little changed after the American Petroleum Institute said U.S. inventories slid 28,000 barrels last week to 392 million. The August contract rose 3 cents to $95.21 at 4:42 p.m. in electronic trading. The contract was at $95.40 before the report was released at 4:30 p.m.
Brent for August settlement increased 10 cents to end the session at $101.26 a barrel on the London-based ICE Futures Europe exchange. Volume was 27 percent below the 100-day average. Brent’s premium to WTI shrank to $5.94, the least since January 2011.
“The spread has been very volatile over the last few days,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy. “We’ve had a huge move in the spread and a lot of what we’re seeing today is due to it coming in too much.”
Excluding transportation equipment, where demand is volatile month to month, durable orders advanced 0.7 percent, also topping projections, Labor Department data showed.
The median forecast of economists surveyed by Bloomberg had called for a 3 percent increase in total orders.
The U.S., the world’s biggest oil-consuming country, accounted for about a fifth of global demand last year, according to BP Plc (BP/)’s Statistical Review of World Energy.
“Durable goods orders were better than expected and that did give oil the demand aspect a boost,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The anticipation that the Enbridge pipeline is coming back is putting pressure on WTI.”
Crude inventories probably shrank last week to 392.4 million as refiners boosted gasoline production to meet rising demand, the Bloomberg survey showed. The government is scheduled to release its weekly petroleum report at 10:30 a.m. tomorrow.
World oil demand will rise in the second half of this year as economic growth continues to recover, Goldman Sachs Group Inc. said today.
“Global demand is picking up,” Stefan Wieler, a Goldman Sachs commodity analyst in New York, said in an e-mailed report. “We expect fundamentals to improve further going into the second half of 2013.”
Prices fell as much as 0.6 percent earlier as Enbridge Inc. (ENB), the largest transporter of Canadian crude to the U.S., restarted a segment of its oil-sands pipeline system in Alberta shut after a leak that followed flooding in the region.
“Enbridge is restarting the pipeline and it makes sense why we would see more weakness in prices,” said Jacob Correll, a Louisville, Kentucky-based commodity analyst at energy management firm Schneider Electric Professional Services.
Enbridge restored operations on the southern segment of the Athabasca pipeline network and said that it will restart other lines over the next several days, according to a company statement yesterday.
Enbridge, based in Calgary, shut the Athabasca and Waupisoo systems, which have total capacity to move as much as 1.17 million barrels a day, after finding a 750-barrel spill on June 22 from Line 37, a link serving Nexen’s Long Lake oil-sands complex. The incident was related to severe flooding in Alberta last week. Oil jumped 1.6 percent yesterday on news of the pipeline shutdown.
Enbridge needs to provide a plan for its shut line to the Alberta Energy Regulator, Darin Barter, spokesman for the agency, said by e-mail today.
Implied volatility for at-the-money WTI options expiring in August was 21.1 percent, down from 22.2 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 728,798 contracts as of 4:54 p.m. It totaled 723,734 contracts yesterday, 17 percent higher than the three-month average. Open interest was 1.84 million contracts.
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