BLBG: Crude Oil Poised for Fourth Week of Gains on Economic Recovery
By Rachel Graham
Oct. 23 (Bloomberg) -- Crude oil headed for a fourth straight week of gains as the dollar weakened and rising global equity markets spurred investor confidence.
Oil has advanced 3.4 percent this week as the dollar index, a measure of the U.S. currency against six peers, fell to its lowest level since August 2008. The MSCI World Index, which comprises 10 industry groups, is set for a third weekly gain.
“Price increases have been partly to do with the dollar,” said Joern Quitzau, a Hamburg, Germany-based economist at Berenberg Bank. “Optimism on the economy has also been a factor.”
Crude for December delivery traded 8 cents higher at $81.27 on the New York Mercantile Exchange as of 12:21 p.m. in London. Oil has risen 82 percent this year and traded at a one-year high of $82 a barrel on Oct. 21.
“Prices have decisively broken out of their $65-$75 band and have made a gentle transition toward the $70-$80 range,” Gayle Berry, a London-based analyst at Barclays Capital, wrote in a report dated yesterday. “On the macroeconomic front, so far the path of recovery has surprised to the upside.”
Crude futures may fall next week on concern that U.S. inventories are sufficient to meet weakening demand, according to a Bloomberg News survey of 36 analysts.
Eighteen analysts, or 50 percent, forecast oil will drop through Oct. 30. Twelve respondents, or 33 percent, said the market will rise and six said prices will be little changed.
Berenberg’s Quitzau also said prices may fall, citing this week’s U.S. government report on crude and fuel stocks. Rising crude stocks coupled with falling gasoline and distillate inventories doesn’t point to an increase in demand, he said. “This tells us less crude is being processed,” Quitzau said from Hamburg.
The Department of Energy report showed a second weekly increase in crude stocks. Inventories of crude oil rose 1.31 million barrels to 339.1 million, the highest level since August, the report showed.
Supplies of distillate fuel, a category that includes heating oil and diesel, fell 784,000 barrels to 169.9 million, according to the department. Gasoline stockpiles dropped 1.1 percent to 206.9 million barrels last week.
Brent crude oil for December settlement rose 16 cents to $79.67 a barrel at 12:22 p.m. on the ICE Futures Europe exchange in London.
