BLBG : Crude Oil Rises a Third Day on Optimism Over Economic Recovery
Oct. 12 (Bloomberg) -- Crude oil rose for a third day on speculation fuel demand will increase amid signs the global economy is emerging from recession.
Oil touched a three-week high as Singapore, Southeast Asia’s fourth-largest economy, raised its 2009 economic forecast, strengthening a regional recovery. U.S. equity markets reached their highest in a year Oct. 9, fanning hopes world energy consumption will accelerate.
“It is optimism for a strong equities performance this week and more signs of economic life that is supporting prices,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “The short-term financial market drivers may drive oil stronger this week.”
Crude oil for November delivery climbed as much as 81 cents, or 1.1 percent, to $72.58 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $72.55 at 2 p.m. Singapore time. Futures have gained 63 percent this year. Japan and the U.S. are closed for public holidays and there will be no Nymex floor trading today.
Oil added 8 cents to $71.77 a barrel on Oct. 9, the highest settlement since Sept. 18, after the International Energy Agency upgraded its 2010 demand forecast for a third month, citing higher-than-expected consumption in Asia and the Americas. Prices rose for a second week as the Standard & Poor’s 500 Index rallied and the Dollar Index slipped to a one-year low, bolstering the investment appeal of commodities including gold.
“We are looking at an international economy that is going to be stronger in 12 months’ time,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “There’s that conviction that things are going to be better down the track” even when some data is not “especially supportive,” he said.
‘Suitable’ Price
Oil has traded about $5 on either side of $70 a barrel since August as traders weigh the prospects for a rebound in demand against concern ample supply will put pressure on prices.
A price between $60 and $80 a barrel is suitable for exporters and importers, Kuwait’s Oil Minister Sheikh Ahmad al- Abdullah al-Sabah told state-run news agency KUNA yesterday. The country is a founding member of the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s crude.
“What’s going to limit any further pricing gains for oil is inventories,” Shum said. “The extended weather forecasts for this winter coming out of both the U.S. and Japan were for a mild winter, so it’s likely the distillates inventories may portend some trouble ahead for oil.”
High Stockpiles
U.S. stockpiles of distillate fuel, including heating oil and diesel, have climbed to their highest since January 1983, according to Energy Department data. Gasoline inventories jumped 2.94 million barrels to 214.4 million as refiners boosted output, the department said Oct. 7.
“Gasoline demand seems to have steadied, but the distillate demand still seems very weak,” Moore said. “It draws into question just how the U.S. economy is really going.”
Hedge-fund managers and other large speculators increased their net-long position in Nymex oil futures in the week ended Oct. 6, according to the U.S. Commodity Futures Trading Commission. Speculative long positions, or bets prices will rise, outnumbered short positions by 50,006 contracts, the Washington- based commission said in its Commitments of Traders report.
Brent crude oil for November settlement rose as much as 80 cents, or 1.1 percent, to $70.80 a barrel on the London-based ICE Futures Europe exchange. It was at $70.77 a barrel at 2 p.m. in Singapore. The contract gained 0.3 percent to $70 a barrel Oct. 9, the highest settlement since Sept. 22.
