BLBG: Oil Trades Near Five-Week High on Signs of Economic Recovery
By Ann Koh
Dec. 29 (Bloomberg) -- Crude oil traded near a five-week high on signs the global economy is recovering from the worst recession since World War II.
Oil rose 0.9 percent yesterday as U.S. retail sales climbed during the holiday season and Chinese government officials said economic growth will exceed 8 percent in 2009. The U.S. economy will turn in its best performance since 2004 next year as spending picks up and companies boost investment and hiring, said Dean Maki, the most accurate forecaster in a Bloomberg News survey.
“Industrial production globally is picking up,” Mark Konyn, chief executive officer at RCM Asia Pacific Ltd., said in a Bloomberg Television interview in Hong Kong. “Investors are still fairly optimistic on China growth.”
Crude oil for February delivery was at $78.69 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 2:12 p.m. Singapore time. Oil gained 72 cents to $78.77 yesterday, the highest close since Nov. 18. Futures have advanced 76 percent this year, poised for the biggest annual gain in a decade.
The dollar traded near a two-month high against the yen on speculation the Federal Reserve will start retracting emergency stimulus measures as the economy recovers. A stronger dollar reduces the appeal of commodities as an inflation hedge.
The dollar bought 91.72 yen at 1:55 p.m. in Tokyo from 91.63 in New York yesterday. The U.S. currency rose to 91.87 yen on Dec. 22, the strongest level since Oct. 27.
U.S. Cold Snap
Cold weather will raise U.S. consumption of heating fuels by 6.7 percent in the next seven days, according to forecasts from Weather Derivatives. The temperature in New York may fall as low as 20 degrees Fahrenheit (minus 7 Celsius) today, 5 degrees below average, according to Weather.com.
Supplies of crude oil and distillate fuel fell last week, while gasoline stocks climbed, a Bloomberg survey of analysts showed. Stockpiles of distillate fuel dropped 2.25 million barrels in the week ended Dec. 25 from 161.3 million the prior week, according to the median of nine estimates by analysts before an Energy Department report tomorrow.
Inventories of crude oil probably declined 2.2 million barrels from 327.5 million the prior week, while gasoline supplies are forecast to climb 1 million barrels from 216.3 million, according to the median of nine estimates by the analysts. The Energy Department is scheduled to release its weekly report in Washington at 10:30 a.m. tomorrow.
Iranian Clashes
Iran extended its harshest crackdown on opposition protests in six months after at least eight people were killed in clashes with security forces, setting the stage for more confrontation.
Authorities detained seven anti-government activists yesterday, including three aides to opposition leader Mir Hossein Mousavi, dissident Web sites said. The U.S. government has threatened to impose sanctions after a Dec. 31 deadline unless Iran responds to diplomatic efforts aimed at allaying suspicions it is developing nuclear weapons.
The disputed June re-election of President Mahmoud Ahmadinejad, which Mousavi says was rigged to deprive him of victory, sparked the biggest anti-government demonstrations since the Islamic revolution ousted the shah in 1979.
Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
Investors will focus on consumer confidence data due in the U.S. today, Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said by phone. The New York- based Conference Board’s consumer confidence index probably rose to 53 this month from 49.5 in November, a Bloomberg News survey of economists showed.
‘Pure Optimism’
Oil’s recent gains reflect “pure optimism leading into the first quarter,” Barratt said. “People are happy about what’s happening and think commodities will be sought after. Whether or not it will last after that is another thing.”
The International Energy Agency increased its forecast for 2010 global oil consumption to 86.3 million barrels a day on Dec. 11, 130,000 barrels a day more than its previous estimate.
Oil has more than doubled since it slumped to $33.98 a barrel on Feb. 12, the lowest settlement this year, as investors bet demand for fuels will rebound as economies emerge from the global recession. Futures, which lost 54 percent in 2008, have gained 76 percent this year, and are set for the biggest annual increase in a decade.
Brent crude for February settlement was at $77.40 a barrel, up 8 cents, on the ICE Futures Europe exchange at 2:17 p.m. Singapore time. It rose $1.01, or 1.3 percent yesterday, to $77.32 a barrel.
To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net
