Bloomberg News

Oil Rises a Second Day After U.S. Stockpile Drop, Jobs Increase

October 06, 2011

Oct. 6 (Bloomberg) -- Oil rose for a second day in New York as shrinking U.S. crude supplies, better-than-expected economic data and signs Europe can control its debt crisis allayed concern that fuel consumption will suffer.

Futures, which rose the most in almost five months yesterday, gained as much as 1.8 percent today. They pared some of their advance after the European Central Bank kept its main interest rate unchanged. Crude inventories fell 4.7 million barrels, the Energy Department reported yesterday. The Labor Department may say tomorrow employment growth in the U.S. resumed last month after stagnating in August. European leaders are working on plans to boost bank capital, an International Monetary Fund official said.

“Oil prices have been quite resistant to the turbulence in the U.S. and Europe,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo who expects Brent to remain at $100 a barrel for the next few weeks and average $110 this quarter. “The latest macro figures have not been as disappointing. It’ll take something worse to bring prices down.”

Crude for November delivery rose as much as $1.47 to $81.15 a barrel in electronic trading on the New York Mercantile Exchange. It was at $80.19 at 1:29 p.m. London time. The contract gained 5.3 percent yesterday. Prices are down 12 percent this year.

Brent oil for November settlement was little changed at $102.75 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.53 to New York crude, compared with a record of $26.87 on Sept. 6.

Cushing Supplies

Crude is extending gains in New York as the technical chart’s five-day stochastic oscillators have fallen below 30, signaling futures have dropped too quickly, according to data compiled by Bloomberg. Investors tend to buy contracts when prices are deemed to be oversold.

Inventories at Cushing, Oklahoma, the delivery point for New York-traded futures, tumbled 831,000 barrels to 30.1 million last week, the lowest level since March 2010, according to the Energy Department report. Supplies declined for a tenth week.

Gasoline stockpiles fell 1.14 million barrels, the report showed. The median of 15 analyst projections in the Bloomberg survey was an increase 1.5 million barrels. Inventories of distillate fuel, a category that includes heating oil and diesel, fell by 744,000 barrels.

U.S. total fuel demand, as measured by products supplied by refiners, averaged 18.9 million barrels over the previous four weeks, the Energy Department report said. That’s 1.3 percent lower than the same time last year.

European Crisis

Oil has fallen this year on speculation Europe’s sovereign debt crisis will worsen a global economic slowdown, curbing demand for commodities. EU officials are working on plans to increase bank capital, Antonio Borges, the IMF’s European department head, said yesterday in Brussels. German Chancellor Angela Merkel said she’s ready to discuss recapitalizing banks at this month’s EU summit.

Tomorrow’s Labor Department report may show U.S. payrolls climbed by 59,000 jobs in September after no change the previous month, according to a Bloomberg survey of economists.

The department said today applications for jobless benefits increased by 6,000 last week to 401,000. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since the end of August.

Data from ADP Employer Services yesterday showed U.S. companies added 91,000 workers in September after an 89,000 gain in August, Roseland, New Jersey-based ADP said yesterday. The median forecast in a Bloomberg survey called for an addition of 75,000.

--With assistance from Christian Schmollinger in Singapore vand Ben Sharples in Melbourne. Editors: John Buckley, Raj Rajendran

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net


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