WTI Advances as Durable Goods Orders Increase

West Texas Intermediate crude advanced for the fourth time in five days as U.S. orders for durable goods climbed more than forecast, raising expectations that stronger growth will spur fuel demand.

Prices gained 0.3 percent. Bookings for goods meant to last at least three years rose 3.5 percent in November, the Commerce Department reported today. Crude also increased as violence in South Sudan forced a partial shutdown of oil production plants.

“The durable goods orders were good and helpful for the market,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “It does point to the fact that we’ve been getting some strong economic signals. Crude is firmer on the news out of South Sudan.”

West Texas Intermediate for February delivery gained 31 cents to end at $99.22 a barrel on the New York Mercantile Exchange. Prices are up 7 percent this month and 8.1 percent this year. The volume of all futures was 72 percent below the 100-day average. Nymex floor trading ended an hour earlier than usual because of the Christmas holiday. The floor will be closed tomorrow and reopen Dec. 26.

Brent for February settlement advanced 34 cents, or 0.3 percent, to $111.90 on the London-based ICE Futures Europe exchange. Volume was 73 percent below the 100-day average. Brent’s premium over WTI was $12.68.

Durable Goods

Durable goods orders grew in November after a 0.7 percent drop the prior month, the Commerce Department said. The median estimate of 75 economists surveyed by Bloomberg called for a 2 percent advance.

Purchases of new U.S. homes exceeded projections in November, holding near a five-year high and showing the housing recovery was gaining momentum even as mortgage rates climbed. Sales reached a 464,000 annualized pace, the Commerce Department reported. The median forecast of 75 economists surveyed by Bloomberg called for 440,000.

“The two good economic indicators suggest that the grip of the recovery is tightening,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This should mean more oil demand next year.”

The Federal Reserve is trimming its monthly bond purchases because of “cumulative progress and an improved outlook for the job market,” Chairman Ben S. Bernanke said at a press conference on Dec. 18.

Gasoline Demand

Total petroleum demand increased to 21 million barrels a day in the week of Dec. 13, the most since April 2008, the Energy Information Administration said last week. Consumption of gasoline climbed for the first time in six weeks, up 8 percent to 9.02 million barrels a day, according to the EIA, the Energy Department’s statistical unit.

Fighting in South Sudan, which exports about 220,000 barrels a day, has killed at least 500 people and forced the government to evacuate some oil workers. Rebel forces loyal to former Vice President Riek Machar said they captured crude-producing Unity state.

South Sudan’s crude is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

ONGC repatriated its 11 employees and the company’s joint venture has shut down oilfields in South Sudan that were producing about 40,000 barrels per day, according to Finance Director S.P. Garg.

Thin Trading

“There is thin holiday trading today and Brent prices are being sustained by political concerns surrounding South Sudan,” said Andrey Kryuchenkov, an analyst VTB Capital in London. “We’ll wait and see how the broader market reacts to the instability there as more news trickles out.”

South Sudan has sub-Saharan Africa’s biggest oil reserves after Nigeria and Angola, according to BP Plc data.

Gasoline stockpiles in the U.S., the world’s largest oil consumer, probably rose by 1.1 million barrels in the week ended Dec. 20, according to a Bloomberg survey before the EIA releases government data on Dec. 27. Supplies climbed the previous four weeks to 220.5 million, the highest since August, according to the EIA.

Crude inventories are projected to have decreased by 2.3 million barrels and supplies of distillate fuels, including diesel and heating oil, were expected to have fallen 1 million, the survey showed.

Implied volatility for at-the-money WTI options expiring in February was 13.9 percent, little changed from yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 123,228 contracts at 1:35 p.m., which would be the lowest level this year. It totaled 237,553 contracts yesterday, 57 percent below the three-month average. Open interest was 1.59 million contracts.

Before it's here, it's on the Bloomberg Terminal.