Oil Trades Near Highest Level in Four Months

Oil traded close to the highest level in four months in New York after posting the longest run of weekly gains since April 2009, lifted by speculation that a global economic recovery will boost fuel demand.

West Texas Intermediate crude advanced as much as 0.6 percent after U.S. durable goods orders rose 4.6 percent in December, more than the 2 percent forecast in a Bloomberg news survey. A second U.S. government report today may show pending homes sales rose last month. The market is well supplied, Abdalla El-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said today.

“Prices have been moving upwards from continued better economic data from the world’s two largest consumers, U.S. and China,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “Continued improved data is required to sustain these higher levels as there remains enough uncertainty within the euro zone for prices to fall.”

Crude for March delivery gained 81 cents to $96.69 a barrel in electronic trading on the New York Mercantile Exchange at 1:49 p.m. London time. The volume of all futures traded was 12 percent below the 100-day average. WTI advanced 0.3 percent last week and closed at $96.24 a barrel on Jan. 22, the highest since Sept. 17.

Brent for March settlement increased 52 cents to $113.70 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 9 percent below the 100-day average. The European benchmark contract was at a premium of $16.97 to WTI. The gap was $17.40 on Jan. 25.

‘Looking Up’

Durable goods orders in the U.S., the world’s biggest oil consumer, advanced 4.6 percent in December from the prior month after climbing 0.8 percent in November, according to the Commerce Department.

“Looking ahead for 2013, the market is expected to remain well-supplied to meet expected demand growth,” El-Badri said at a conference in London.

WTI will trade from $95 to $97 a barrel this week and Brent from $112 to $114 a barrel, according to Hansen.

Hedge funds boosted bullish bets on WTI for a sixth consecutive week as futures advanced. Money managers increased net-long positions, or wagers that crude will rise, by 15 percent in the week ended Jan. 22, according to the Commodity Futures Trading Commission’s Jan. 25 Commitments of Traders report. It was the longest run of gains in records dating back to June 2006.

Bullish Bets

In London, bullish bets on Brent crude rose to the most in more than two years, according to data from ICE Futures Europe.

The average price for retail regular gasoline in the U.S. rose 1.96 cents a gallon in the past two weeks to $3.3443 a gallon, according to Lundberg Survey Inc. The survey covers the period ended Jan. 25 and is based on information obtained from about 2,500 stations by the Camarillo, California-based company. The average price is down 5.01 cents from a year earlier.

Oil may rise this week as the U.S. Federal Reserve continues an asset-buying program to boost the economy and reduce the jobless rate, according to Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo who says WTI may climb as high as $100 a barrel this week, while Brent will trade from $112 to $118. The Federal Open Market Committee will announce its latest policy statement after its Jan. 30 meeting.

Unemployment was probably unchanged at 7.8 percent in January, according to the median forecast in a Bloomberg survey of economists before Labor Department figures Feb. 1. Fed Chairman Ben S. Bernanke said Jan. 14 that the rate “is not an acceptable situation.”

“If the results of the FOMC and employment data are better than expected, then WTI might try to touch $100 a barrel,” Hasegawa said.

WTI’s advance may stall as a technical indicator shows futures have advanced too quickly for further gains to be sustainable. The 14-day relative strength index is at 68.1 today, according to data compiled by Bloomberg. A reading above 70 signals a market is overbought and will probably decline.

An attack on an Algerian oil pipeline today killed two guards, Reuters reported, citing a security official it did not identify by name.

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