Oil Caps Longest Streak of Weekly Gains Since 2009 on U.S. Jobs
November 06, 2011, 6:32 PM ESTBy Moming Zhou
Nov. 4 (Bloomberg) -- Oil rose in New York to cap the longest streak of weekly gains in more than two years on speculation that an unexpected drop in the U.S. jobless rate will spur fuel demand.
Oil increased to a three-month high after the Labor Department said unemployment declined to 9 percent in October, less than the 9.1 percent median estimate in a Bloomberg News survey of economists. Earlier, prices slid as the Group of 20 nations failed to agree to boost International Monetary Fund resources to fight Europe’s debt crisis.
“The jobs report looks positive for the economy in a sense that we are seeing signs of recovery,” said Carl Larry, president of Oil Outlooks & Opinions LLC in New York. “We don’t know if Europe is going to be a bullish or bearish sign for the market, depending on what they want to do going forward.”
Crude oil for December delivery rose 19 cents, or 0.2 percent, to $94.26 a barrel on the New York Mercantile Exchange, the highest settlement level since Aug. 1. Prices are up 1 percent since Oct. 28. Oil has risen for five consecutive weeks, the longest streak since the period ended April 3, 2009. Futures have risen 3.2 percent this year.
Brent oil for December settlement gained $1.14, or 1 percent, to $111.97 a barrel on the London-based ICE Futures Europe exchange.
The unemployment rate fell from 9.1 percent in September, the Labor Department said today in Washington.
Nonfarm payrolls increased 80,000 last month, the slowest pace in four months, the government data showed. The median estimate in a Bloomberg News survey was for a gain of 95,000. The department also revised higher the job gains of the previous two months by 102,000.
U.S. Economy
The U.S. economy is “underperforming,” President Barack Obama said at a news conference in Cannes, France, where he was attending the meeting of G-20 leaders. The Labor Department’s figures “were positive but indicate once again that the economy’s growing way too slow.”
Federal Reserve policy makers, who refrained from taking additional steps to ease monetary policy at their meeting this week, said in a statement on Nov. 2 that the U.S. economy strengthened last quarter while there are “significant downside risks to the economic outlook.”
The Fed projected this week that the U.S. will grow 2.5 percent to 2.9 percent in 2012, measured from the fourth quarter of this year to the fourth quarter of next year. It forecast unemployment in the 8.5 percent to 8.7 percent range.
G-20 Summit
World leaders at the G-20 summit balked at spending more money to help bail out the euro area, demanding the region’s own governments first do more to fix the two-year-old debt crisis. German Chancellor Angela Merkel said governments are awaiting further details of Europe’s week-old rescue package before they commit cash.
Equities tumbled on the European financing news, sending the Standard & Poor’s 500 Index toward its first weekly drop since September. The index fell 1 percent to 1,248.97 at 3:09 p.m. in New York, and the Dow Jones Industrial Average slid 1 percent to 11,930.04
“There is still a lot of skepticism about whether a European debt agreement will work,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Oil gained 1.7 percent yesterday after Greece said that it won’t hold a public vote on a European bailout package. European Central Bank President Mario Draghi said yesterday that Europe is heading toward a “mild recession.” The bank unexpectedly lowered interest rates by 25 basis points to 1.25 percent.
Euro Region Risk
“The euro-zone is the risk factor for the oil price,” said Sintje Boie, an analyst at HSH Nordbank in Hamburg, who predicts the price of Brent crude will slide to $105 by year- end. “The uncertainty is high but we don’t expect it will end in a catastrophe.”
The European Union accounted for 16 percent of world oil demand in 2010, according to BP Plc’s annual Statistical Review of World Energy. The U.S. is the world’s biggest oil consumer, using 19.1 million barrels a day, or 22 percent of global consumption.
Oil may fall next week amid concern that the global economy is slowing, according to a Bloomberg News survey.
Nineteen of 31 analysts, or 61 percent, forecast oil will decline through Nov. 11. Ten, or 32 percent, predicted a gain, and two said there will be little change.
Oil volume in electronic trading on the Nymex was 461,036 contracts as of 3:14 p.m. in New York. Volume totaled 552,872 contracts yesterday, 20 percent below the three-month average. Open interest was 1.35 million contracts.
--With assistance from Shobhana Chandra in Washington and Grant Smith in London. Editors: Margot Habiby, Bill Banker
To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
