BLBG: Oil Trades Near 27-Month High as Economic Recovery May Boost Energy Demand
Oil traded near a 27-month high after growth in U.S. and European manufacturing bolstered speculation the economic recovery will strengthen fuel demand.
Futures advanced 0.2 percent yesterday after the Institute for Supply Management’s U.S. factory index climbed at the fastest pace in seven months. European manufacturing also grew more than estimated, powered by an export-led expansion in Germany, the region’s largest economy. U.S. crude inventories probably fell a fifth week, a Bloomberg News survey showed.
“In the U.S. and euro area, people are looking for any signs of recovery and for that to flow on to demand,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. The manufacturing data “would have had a positive impact. We’re looking at crude prices in the $91 to $92 a barrel range,” he said.
Crude for February delivery was at $91.60 a barrel in electronic trading on the New York Mercantile Exchange, up 5 cents, at 12:55 p.m. Singapore time. Yesterday, the contract rose 17 cents to $91.55, the highest settlement since Oct. 3, 2008, after peaking at $92.58.
The U.S. factory index climbed to 57 last month from 56.6 in November. A reading greater than 50 points to expansion. Construction spending in the nation, the world’s biggest oil user, rose in November for a third month, boosted by federal government projects, the Commerce Department said yesterday.
Factory activity in the euro area increased to 57.1 from 55.3 the previous month, London-based Markit Economics said yesterday. That’s higher than the 56.8 reported earlier for December.
Crude Stockpiles
Oil rallied 15 percent last year, adding to a 78 percent surge in 2009, on speculation the global economic rebound and declining stockpiles signaled demand is growing.
U.S. crude inventories are expected to have dropped for a fifth week last week, the longest decline since July 2009, according to a Bloomberg News survey before an Energy Department report tomorrow. Supplies fell 1.75 million barrels from 339.4 million in the week ended Dec. 31, based on the median estimate of eight analysts.
Gasoline stockpiles probably increased 50,000 barrels from 214.9 million, the survey showed. Distillate fuel inventories, including heating oil and diesel, may have climbed 625,000 barrels from 161 million.
Brent crude for February settlement traded at $94.97 a barrel, up 13 cents, on the London-based ICE Futures Europe exchange. Yesterday, the contract gained 9 cents to $94.84, the highest settlement since Oct. 1, 2008.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
