Oil rose from the lowest in three weeks as investors bet yesterday’s decline made the commodity attractive amid a recovery in economic growth. Crude gained as much as 0.8 percent in New York, reversing earlier losses, before a report today that may show U.S. employers added jobs for a third month. Economists raised forecasts for U.S. jobs growth this week, with the median estimate calling for a gain of 150,000 in December and a drop in the unemployment rate to 9.7 percent. “We’re seeing people position themselves before the jobs report,” said Ken Hasegawa, a commodity derivative sales manager at broker Newedge in Tokyo. “If the data is strong, it will push prices back to $90.” The February contract climbed as much as 69 cents to $89.07 a barrel in electronic trading on the New York Mercantile Exchange, and was at $88.83 at 12:26 p.m. Singapore time. Yesterday, it declined $1.92, or 2.1 percent, to $88.38, the lowest settlement since Dec. 17. Crude slumped yesterday as the dollar gained against the euro on signs that the U.S. economy is improving. The greenback reached the strongest level against the European currency since Sept. 15. Oil has dropped 2.6 percent this week. “The U.S. macro data that we’ve seen in the past two-to- three months seems to have surpassed market expectations,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone. “But it’s not a fast rebound or a quick recovery.” Brent-WTI Spread Brent crude oil for February settlement was at $93.88, down 64 cents, on the London-based ICE Futures Europe exchange. Yesterday, it fell 98 cents, or 1 percent, to $94.52. Brent’s premium to West Texas oil futures traded in New York climbed to $6.14 a barrel yesterday, the most since Feb. 13, 2009, according to data compiled by Bloomberg. This spread narrowed to $5.09 today. Traders are selling Brent contracts and buying West Texas futures on expectation that the premium will narrow. The average price difference between the crude grades over the past two years is 76 cents a barrel. “That spread has been quite wide,” said Newedge’s Hasegawa. “So people are buying back WTI and selling Brent, thinking it will start coming back.” WTI Contango New York futures slumped versus Brent as inventories at the Cushing, Oklahoma, delivery point for the U.S. contract climbed 18 percent in the past eight weeks. The stockpile gain has also made near-term supplies of West Texas oil less expensive than future months, a condition known as contango. The spread between the February and April contracts on the Nymex widened to $2.52 a barrel yesterday, the largest differential between the exchange’s first and third month contracts since Sept. 23. The difference was $2.10 today. To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

Source