Bloomberg News

Oil Heads for Second Week of Gains on Economy, Tropical Storm

July 08, 2011

July 8 (Bloomberg) -- Oil traded near the highest in more than three weeks in New York before a U.S. report that may show payrolls increased.

Futures fluctuated, falling as much as 0.3 percent amid signs of ample crude supplies in the U.S., and gaining 0.3 percent today after data showed U.S. companies added twice as many workers as forecast in June. Crude supplies fell 0.3 percent to 358.6 million barrels last week, above the five-year average of 345 million, according to data compiled by Bloomberg.

“It’s a temporary indication that growth is likely to be a bit healthier in the second half and that’s good for oil demand, especially given that we’ve got relatively abundant crude stocks in the U.S. still,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil will average $113 a barrel in the third quarter.

Crude for August delivery was at $98.68 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange at 3:04 p.m. Singapore time. It gained as much as 30 cents to $98.97 and fell as low as $98.34. The contract yesterday climbed $2.02 to $98.67, the highest since June 14. Prices are 3.9 percent higher this week and up 31 percent the past year.

Brent oil for August settlement fell 17 cents, or 0.1 percent, to $118.42 a barrel on the London-based ICE Futures Europe exchange.

Record Spread

Oil’s advance in New York may stall before prices reach $100 a barrel because of technical resistance at the 50-day moving average, according Bloomberg data. This level is at $99.19 today. Futures have been trading below the indicator for more than two months.

Brent’s premium to New York crude futures is headed for a second weekly gain after widening the most in almost four months yesterday as Libyan output cuts and North Sea maintenance drive the European benchmark grade higher.

Futures in London were $19.92 a barrel higher than West Texas Intermediate in New York yesterday, after widening $2.95, the most since March 9. The gap between front-month futures of both grades surged to a record $22.29 on June 15.

“The ECB’s decision to raise interest rates led to a bigger rise in Brent than in WTI,” said Gordon Kwan, head of regional energy research at Mirae Asset Securities Ltd. in Hong Kong. Mirae forecasts Brent’s premium to WTI to widen to $40 a barrel in the next 12 months.

U.S. Stockpiles

U.S. crude supplies fell 889,000 barrels to 358.6 million last week, the lowest level since April, an Energy Department report showed. A 2.5 million-barrel decline was projected, according to the median estimate of 15 analysts surveyed by Bloomberg News.

Stockpiles of crude at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, the grade traded in New York, slipped 460,000 barrels to 37 million barrels last week, the Energy Department report showed.

A 2.5 million-barrel decline in total U.S. crude supplies was projected for last week, according to the median estimate of 15 analysts surveyed by Bloomberg News. The U.S. is the world’s biggest consumer of the commodity.

The U.S. added 105,000 jobs in June, almost double the 54,000 created a month earlier, according to the median estimate in a Bloomberg News survey before a Labor Department report today. Private hiring climbed 125,000 last month, while the jobless rate held at 9.1 percent, the survey showed.


Calvin became the third tropical storm of this year’s eastern Pacific hurricane season, and is expected to strengthen in the next couple of days, according to the U.S. National Hurricane Center.

The storm was located about 205 miles (330 kilometers) south of Manzanillo, Mexico, and was moving west-northwest at 14 miles per hour, according to an advisory released at 8 p.m. Pacific Daylight Time. Top winds are 40 mph, and are forecast to strengthen over the next two days. Calvin is expected to weaken into a low-pressure system in six days, the NHC said. There were no coastal watches or warnings in effect.

--With assistance from Yee Kai Pin in Singapore. Editors: Jane, Ching Shen Lee, Alexander Kwiatkowski

To contact the reporter on this story: Ann Koh in Singapore at; Ben Sharples in Melbourne at

To contact the editor responsible for this story: Alexander Kwiatkowski at

Toyota's Hydrogen Man
blog comments powered by Disqus