BLBG: Oil Rises for a Fourth Day as U.S. Economic Recovery May Spur Fuel Demand
Crude rose for a fourth day, advancing past $90 a barrel on signs that economic recovery in the U.S. is eroding excess inventories.
Futures climbed as much as 0.5 percent before a government report forecast to show U.S. crude stockpiles declined for a third week. Yesterday, industry data showed a reduction in supplies. The Commerce Department will probably say today that the world’s biggest economy expanded more than estimated in the third quarter, according to a Bloomberg survey.
Crude for February delivery rose as much as 55 cents to $90.37 a barrel in electronic trading on the New York Mercantile Exchange, the strongest since the two-year peak of $90.76 reached on Dec. 7. It was at $90.26 at 11:14 a.m. London time. Prices have climbed 14 percent this year. Brent crude for February settlement gained as much as 59 cents, or 0.6 percent, to $93.79 a barrel on the London-based ICE Futures Europe exchange.
“Heating demand is high,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “U.S. heating-oil demand was reported 16 percent above normal last week. Economic growth in the U.S. is slow and steady, but there is growth ahead.”
Yesterday, futures gained 1.1 percent to $89.82 a barrel, the highest settlement since Oct. 7, 2008. That was 2 cents below a long-term resistance level on technical charts, the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July that year.
U.S. GDP grew 2.8 percent in the third quarter, up from an estimate of 2.5 percent last month, based on the median forecast economists surveyed by Bloomberg before a Commerce Department report.
Crude Supplies
Prices gained after the industry-funded American Petroleum Institute reported yesterday that U.S. crude supplies declined 5.8 million barrels to 342 million last week. Gasoline inventories dropped 2.9 million while middle distillates increased 16,000 barrels, the API said.
“There’s no doubt that we’ve seen a tightening in the market’s balance over the last few months,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said in an interview with Rishaad Salamat on Bloomberg Television’s “On the Move Asia” program. “A lot of it does depend on what you see for the demand picture going forward.”
Crude also rose after U.S. holiday retail sales data, a key economic indicator, advanced. Same-store sales at a selection of U.S. retailers posted their biggest holiday jump, according to a chain-store sales index released yesterday by the New York-based International Council of Shopping Centers and Goldman Sachs Group Inc.
Heating Oil
The Department of Energy will release its oil-inventory report in Washington today. The data may show U.S. crude stockpiles fell last week as refiners on the Gulf Coast reduced their assets for tax savings at the end of the year, according to a Bloomberg survey.
Supplies dropped 3.4 million barrels in the seven days ended Dec. 17 from 346 million, based on the median estimate of 14 analysts. Stockpiles in the previous week slumped 9.85 million as imports fell.
Gasoline inventories may have increased 1.5 million barrels from 214.8 million, the survey showed. Analysts were split over whether stockpiles of distillate fuel, a category that includes heating oil and diesel, declined or gained.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
