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Oil rose from the lowest price in more than a week in New York as investors speculated that signs of a strengthening U.S. economy will bolster fuel demand in the the world’s biggest crude user.
Futures advanced as much as 0.5 percent after a 1.2 percent drop yesterday. The number of Americans applying for jobless benefits declined last week, according to a Bloomberg News survey before a report today. U.S. petroleum demand climbed 2.2 percent to the highest in a month, Energy Department data showed yesterday. Global oil-market fundamentals will tighten this year and push London-traded Brent crude toward a 2013 forecast of $130 a barrel, Goldman Sachs Group Inc. said.
“We won’t see aggressive selling of the oil contract while that U.S. economic data continues to point to a recovery,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “We have jobless claims coming up and people are looking for further indicators of the health of the U.S. economy.”
Crude for April delivery climbed as much as 52 cents to $105.95 a barrel in electronic trading on the New York Mercantile Exchange. It was at $105.73 at 4:10 p.m. Singapore time. Yesterday, the contract fell $1.28 to $105.43, the lowest settlement since March 6. Prices are up 7 percent in 2012.
Brent oil for April settlement on the London-based ICE Futures Europe exchange was at $125.06, up 9 cents. The contract expires today. The more active May futures were 9 cents higher at $124.67. The European benchmark contract was at a $19.33 premium to New York futures. The gap was $19.54 yesterday, the widest since Oct. 24.
The U.S. Labor Department may say today that the number of Americans applying for jobless benefits fell by 5,000 to 357,000 in the week ended March 10, according to the median estimate of 51 economists surveyed by Bloomberg. An index of manufacturing in the Philadelphia region probably increased to a reading of 12 in March from 10.2 the previous month, another survey shows.
Spare crude-production capacity among members of the Organization of Petroleum Exporting Countries, responsible for about a third of global supply, has dropped to “dangerously low levels,” David Greely, Goldman’s head of energy research in New York, said in a report distributed today. Brent rallied 11 percent in February, the most in a year, on concern European Union and U.S. sanctions on Iran will disrupt Mideast supplies.
“We expect prices to average $130 in 2013, so we expect them to rise higher between now and then,” Greely said in a separate e-mail response to questions from Bloomberg News. “On a 12-month horizon we see Brent prices at $127.50.” Brent averaged $110.78 a barrel in 2011 and $80.32 in 2010.
A measure of U.S. oil-products consumption rose to 18.6 million barrels a day in the week to March 9, the highest since the period ended Feb. 10, the Energy Department said in a report yesterday.
Gasoline stockpiles fell 1.41 million barrels, the report showed. They were forecast to decline by 1 million. Distillate inventories, a category that includes diesel and heating oil, slid 4.68 million barrels, more than three times a projected drop of 1.5 million.
Crude supplies at Cushing, Oklahoma, the delivery point for New York contracts, climbed 7 percent to 38.7 million barrels last week, the highest in nine months, according to the Energy Department. Stockpiles nationwide rose 1.75 million barrels to 347.5 million, a six-month high. The increase was the seventh in eight weeks.
Oil markets are balanced and have ample output and refining capacity, Saudi Arabia’s Oil Minister Ali al-Naimi said at the International Energy Forum in Kuwait yesterday. Market volatility is caused by speculation, he told the meeting of producers and consumers. U.S. Energy Secretary Steven Chu said he is “enthusiastic” about Saudi willingness to produce more oil to offset the effect of economic sanctions on Iran.
The EU is seeking to ban imports of products including petroleum oils and natural gas from Iran and to bar global bank- transfer messaging companies from providing services to entities subject to EU sanctions, according to a draft regulation obtained by Bloomberg. Iran’s oil exports will probably decline by 50 percent when the sanctions take full effect in July, the International Energy Agency said in its monthly report yesterday.
U.S. President Barack Obama and U.K. Prime Minister David Cameron talked during a meeting yesterday at the White House about releasing oil from strategic petroleum reserves without reaching a decision, according to a U.K. official who spoke on condition of anonymity because the talks were confidential.
Democrats in the U.S. Congress have called on Obama to use the oil stockpile to fight an increase in gasoline prices spurred by tensions with Iran over its nuclear program. Regular gasoline at the pump, averaged nationwide, rose 0.6 cents yesterday to $3.811 a gallon, according to data from AAA, the nation’s biggest motoring organization. Prices are 7.2 percent higher than a year earlier.
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