BLBG: Oil Climbs on Bets U.S. Economic Growth to Accelerate, Boosting Energy Use
Oil rose on speculation U.S. economic growth will accelerate next year, bolstering demand in the world’s biggest oil-consuming country.
Futures climbed 0.9 percent before the release of data this week that may show U.S. gross domestic product expanded at a faster pace than estimated earlier. Gasoline futures advanced as a fuel-making unit serving the U.S. East Coast market remained shut for repairs.
“We’re seeing U.S. economic optimism creep into the price of oil,” said Phil Flynn, a Chicago-based analyst and trader with investment adviser PFGBest. “The economic data has been good and we’re getting evidence that the overall economy is taking off a little bit.”
Crude oil for January delivery increased 79 cents to settle at $88.81 a barrel on the New York Mercantile Exchange. January futures expired today. The more-active February contract rose 77 cents, or 0.9 percent, to $89.37 a barrel.
Gasoline surged 6 cents, or 2.6 percent, to end the session at $2.3778 a gallon in New York. It was the highest settlement since May 3.
Recent U.S. economic data “bodes well” for 2011, Federal Reserve Bank of St. Louis President James Bullard said on CNBC television today.
“If we can get that going, I think the economy can build some momentum and we’ll be able to bring unemployment down,” he said. “But it is going to be a slow process. We have to walk before we can run.”
Economic Growth
Data scheduled for release by the Commerce Department on Dec. 22 will probably show U.S. GDP grew 2.8 percent in the third quarter, up from an estimate of 2.5 percent last month, according to a Bloomberg survey of 61 analysts.
Goldman Sachs Group Inc. chief U.S. economist Jan Hatzius increased his 2011 GDP forecast to 3.4 percent from 2 percent last month to take account of the two-year extension of the Bush-era tax cuts and a spate of stronger-than-expected economic statistics.
“Everyone is expecting a move up in the oil market,” Roland Stenzel, a crude-oil trader at E&T Energie Handelsgesellschaft mbH, said from Vienna. “Technically it’s looking strong, fundamentally it’s looking strong.”
The Standard & Poor’s 500 Index advanced 0.3 percent to 1,247.48 at 3:10 p.m. in New York, and the Dow Jones Industrial Average was little changed at 11,486.38.
Refinery Repairs
Gasoline gained strength as Hovensa LLC worked to repair the 150,000-barrel-a-day fluid catalytic cracker at its St. Croix refinery, the largest in the Caribbean. The plant supplied 139,000 barrels a day of finished gasoline and blending components to the East Coast in September, including New York Harbor, the delivery point for the Nymex gasoline contract.
“Gasoline is showing strength because of tightness in the New York Harbor,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York.
An Energy Department report on Dec. 22 will probably show that U.S. crude-oil stockpiles dropped 3.5 million barrels last week, according to the median of seven analyst estimates in a Bloomberg News survey.
The oil market is “well balanced,” and current prices are at a “good” level, Algerian Minister of Energy and Mines Youcef Yousfi said in an interview. Algeria, an OPEC member, produced 1.25 million barrels of crude a day in November, according to data compiled by Bloomberg.
The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, maintained output quotas of 24.845 million barrels a day for 11 of its members at a meeting in Quito, Ecuador, on Dec. 11.
Price Outlook
Oil prices may increase next year on heightened demand that has eroded excess global crude inventories, according to the Centre for Global Energy Studies. Prices will be strongly influenced by OPEC’S response to rising consumption, CGES said. The center forecasts oil demand will climb 1.6 percent in 2011, compared with a 3 percent gain this year.
Brent crude oil for February settlement climbed $1.07, or 1.2 percent, to $92.74 a barrel on the London-based ICE Futures Europe exchange. It was the highest settlement price since Oct. 1, 2008.
Oil volume on the Nymex was 509,555 contracts as of 3:09 p.m. in electronic trading in New York. Volume totaled 650,488 contracts on Dec. 17, 4.2 percent below the average of the past three months. Open interest was 1.35 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
