Feb. 17 (Bloomberg) -- Oil traded near the highest price in six weeks as signs of an improving U.S. economy and progress on a bailout plan for Greece bolstered the outlook for fuel demand.
Futures were little changed, heading for the biggest weekly gain this year, after U.S. jobless claims dropped to the lowest level since 2008. European governments are considering cutting interest rates on emergency loans to Greece and using European Central Bank contributions to plug a financing gap in the second bailout program, two people familiar with the discussions said.
“After the resolution of the issues, the economic situation of developed countries will be in better shape,” said Tetsu Emori, a Tokyo-based commodity fund manager at Astmax Ltd. who predicts that West Texas Intermediate will reach $145 a barrel and Brent will climb to $155 by the end of the year. “Oil demand in Europe is not that strong due to the uncertainty over Greece.”
Crude for March delivery was at $102.41 a barrel, up 10 cents, on the New York Mercantile Exchange at 10:22 a.m. Singapore time. Prices yesterday rose 51 cents, or 0.5 percent, to $102.31, the highest close since Jan. 4. They are up 3.8 percent this week, the most since the period ended Dec. 23, and 19 percent the past year.
Brent oil for April settlement rose 17 cents to $120.28 a barrel on the ICE Futures Europe exchange. The contract yesterday jumped $1.18, or 1 percent, to $120.11 a barrel, the highest close in eight months. The premium to West Texas Intermediate for the same month was at $17.59, compared with a record $27.88 on Oct. 14.
Brent ‘Main Driver’
Crude in New York has technical resistance along the upper Bollinger Band on the daily chart, according to data compiled by Bloomberg. This indicator is around $102.82 a barrel today. Sell orders tend to be clustered near chart-resistance levels.
Oil may rise next week on concern that shipments will be disrupted as tension between Iran and the West over the country’s nuclear program increases, a Bloomberg News survey showed. Fifteen of 37 analysts, or 41 percent, forecast oil will climb through Feb. 24. Twelve respondents, or 32 percent, predicted prices will decline and 10 estimated there will be little change.
“The main driver of the market is Brent, which potentially has more lift to the upside due to supply-side risks,” said Emori. Daily volumes in options granting the right to buy Brent for more than the current market price have risen above 25,000 on four days during the past two weeks, signaling an increase in bets on a possible price rally.
Oldest Saudi Field
Iran said Feb. 15 that it was cutting crude shipments to France and the Netherlands, and had loaded locally built fuel plates into its nuclear research reactor in Tehran, according to reports by the state-run Mehr news agency and Press TV, respectively. The EU decided last month to halt purchases from Iran from July 1 in an attempt to halt its nuclear program.
Saudi Arabian Oil Co. plans to re-open the Damman oilfield, the company’s oldest, and produce there for the first time in 30 years in response to “tight market conditions,” the Economist Intelligence Unit reported yesterday. Officials at Aramco’s headquarters in Dhahran, Saudi Arabia, didn’t answer phone calls seeking comment.
U.S. applications for unemployment insurance payments dropped 13,000 in the week ended Feb. 11 to 348,000, the Labor Department said yesterday. The figures was less than the most optimistic estimate of 45 economists surveyed by Bloomberg News.
Greece expects euro area finance ministers to approve a second aid package at a meeting on Feb. 20, according to Pantelis Kapsis, a government spokesman. Overcoming the final obstacles may enable finance ministers to approve the 130 billion-euro ($170 billion) lifeline and a bond exchange with private investors that is critical to staving off a Greek default in March, the German finance ministry told coalition lawmakers in Berlin yesterday, three officials said.
--With assistance from Yee Kai Pin in Singapore. Editors: Paul Gordon, Mike Anderson
To contact the reporter on this story: Ann Koh in Singapore at firstname.lastname@example.org
To contact the editor responsible for this story: Alexander Kwiatkowski at email@example.com