Bloomberg News

Oil Increases for Third Day as U.S. Consumer Confidence Gains

November 29, 2011

Nov. 29 (Bloomberg) -- Oil rose for a third day in New York after U.S. consumer confidence climbed by the most in more than eight years and Iranian protesters broke into and vandalized the British Embassy’s compound in Tehran.

Futures increased 1.6 percent as the Conference Board’s index advanced to 56 in November from 40.9 in October, the biggest monthly gain since April 2003. The embassy attack came a week after the U.S. and U.K. imposed more sanctions on Iran, OPEC’s second-largest oil producer, over its nuclear program.

“The consumer confidence numbers gave us a big pop,” said Phil Flynn, an analyst with PFGBest in Chicago. “The concerns about Iran are increasing. The attack on the British embassy is an escalation and the new sanctions could have an impact on oil supply in the near future.”

Crude oil for January delivery rose $1.58 to $99.79 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 16. Prices are up 9.2 percent this year.

Prices were little changed from the settlement after the industry-funded American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil inventories rose 3.44 million barrels to 339.2 million last week. January oil was up $1.48, or 1.5 percent, to $99.69 a barrel in electronic trading at 4:32 p.m.

Brent oil for January settlement gained $1.82, or 1.7 percent, to end the session at $110.82 a barrel on the London- based ICE Futures Europe Exchange.

The confidence gauge reached a four-month high, according to the Conference Board, a New York-based private research group. It exceeded the most optimistic forecast in a Bloomberg News survey of economists and signaled that consumers grew more upbeat about employment and income prospects in the U.S., the world’s largest oil-consuming country.

Iranian Protest

The protesters in Iran chanted slogans, including “death to the U.K.” and “the U.K. Embassy must be shut,” state-run Press TV reported from the scene.

Students seized the U.S. Embassy in Tehran and held 52 Americans hostage for 444 days during the 1979 revolution that ousted pro-Western Shah Mohammad Reza Pahlavi and brought Shiite Muslim clerics to power. The crisis during the administration of President Jimmy Carter led the U.S. to sever ties with Iran.

“The attack today reminds one of the Jimmy Carter years and the seizure of the U.S. embassy,” Flynn said.

The revolution caused Iranian oil production to drop by 3.9 million barrels a day from 1978 to 1981, according to the U.S. Energy Department.

Iran’s Foreign Ministry said the actions of a “small” number of protesters to assault the embassy is “regrettable,” Mehr news agency reported. U.K. Foreign Secretary William Hague said all British Embassy staff members and their dependents have been accounted for following the storming of the mission’s two compounds in Tehran.

Output Estimates

Iran pumped 3.58 million barrels a day of oil in October, according to Bloomberg News estimates, trailing only Saudi Arabia among producers in the Organization of Petroleum Exporting Countries.

About 15.5 million barrels of oil a day, the equivalent of about a sixth of global consumption, flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department.

Oil prices also rose as euro-area finance ministers reapproved a 5.8 billion-euro ($7.7 billion) loan to Greece under last year’s bailout after eliciting budget-austerity pledges from Greek political leaders backing a unity government, a European official said. Ministers from the 17-member monetary union are meeting in Brussels tonight.

Oil Outlook

“The situation in Iran seems to be inching towards a conclusion that won’t be good for the oil outlook,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “Also, Europe hasn’t fallen apart and may actually be making progress in dealing with the debt crisis. That’s helping both equities and the oil market because of the implications it has for the economy.”

Demand for Italy’s 2014 bonds increased to 1.5 times the amount on offer today from 1.35 times at the previous auction on Oct. 28. The 2014 note yielded 7.89 percent, the highest level since September 1996 for a three-year bond and up from 4.93 percent when similar-maturity debt was sold last month.

The U.S. Energy Department will probably report tomorrow that crude oil stockpiles rose 50,000 barrels last week, according to the median of 12 analyst estimates in a Bloomberg News survey.

Oil volume in electronic trading on the Nymex was 551,476 contracts as of 4:32 p.m. in New York. Volume totaled 565,619 contracts yesterday, 15 percent below the three-month average. Open interest was 1.3 million contracts.

--With assistance from Ladane Nasseri in Dubai and Caroline Alexander in London. Editors: Margot Habiby, Bill Banker

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus