Oil rose for the first time in six days in New York, ending the longest losing streak since May, on signs that that U.S. economic growth is accelerating and speculation the Bank of Japan (8301) will increase stimulus.
Futures advanced 0.4 percent after reports showed U.S. jobless claims dropped last week and durable goods orders gained in August. The Commerce Department will probably report that growth increased in the third quarter, according to a Bloomberg survey. The Nikkei newspaper reported the Bank of Japan will add to its asset-purchase program.
“Today’s data was modestly positive and tomorrow’s GDP number should be positive as well,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “It appears that the economy is expanding moderately. This is supportive for oil.”
Crude oil for December delivery rose 32 cents to settle at $86.05 a barrel on the New York Mercantile Exchange. The contract settled at $85.73 yesterday, the lowest since July 10. Prices are down 13 percent this year.
Brent oil for December settlement increased 64 cents, or 0.6 percent, to end the session at $108.49 a barrel on the London-based ICE Futures Europe exchange. It was the first gain in eight days, ending the longest losing streak since July 2010.
The European benchmark crude oil settled at a $22.44 premium to West Texas Intermediate grade traded in New York, up from $22.12 yesterday.
Unemployment claims decreased by 23,000 to 369,000 in the week ended Oct. 20 from a revised 392,000 the prior period, the Labor Department reported in Washington. The median forecast of 48 economists surveyed by Bloomberg called for a drop in claims to 370,000.
Demand for durable goods climbed 9.9 percent last month, a Commerce Department report showed. The median forecast of 77 economists surveyed by Bloomberg called for a 7.5 percent gain in orders.
The economy grew at a 1.8 percent annual rate in the third quarter after expanding at a 1.3 percent pace the prior three months, according to the median forecast of economists surveyed by Bloomberg. The Labor Department’s October employment report will be released Nov. 2, four days before the U.S. presidential election.
“We should expect some sideways trading until we get through some important events ahead,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “There are the GDP numbers on Oct. 26, the October jobless figures on Nov. 2 and then the election on Nov. 6.”
Polls show challenger Mitt Romney leading President Barack Obama by 0.7 percentage point in the popular vote. The candidates are racing to campaign in as many of the electoral battleground states as possible with less than two weeks before Election Day.
Nikkei said Japan’s central bank will consider increasing its asset-purchase program by 10 trillion yen ($125 billion) to 90 trillion yen at an Oct. 30 meeting. The U.S. Federal Reserve yesterday said it will maintain stimulus after last month committing to a third round of bond buying to bolster growth.
Japan’s Economy Minister Seiji Maehara, who has been calling for more action from the central bank, said earlier this week that he may attend the meeting. He was present at the central bank’s previous gathering, the first minister to do so for more than nine years.
The Asian nation is the third-biggest oil consuming country, responsible for 5 percent of global demand in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. and China, the two largest consumers, used a combined 32 percent of the world’s supply last year.
“The rally began with the Nikkei report that the Bank of Japan may be boosting stimulus,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The market definitely looked overextended to the downside after falling for five days.”
Oil also rose with commodities and equities as results from Procter & Gamble Co. (PG:US), BASF SE and Unilever NV (UNA) beat analyst estimates. The Standard & Poor’s 500 Index (SPX) advanced 0.1 percent.
Oil rebounded in New York after yesterday’s drop sent the relative strength index to 31.57, the lowest level since June 28. Crude climbed from a nine-month low in June when the RSI slid below 30, signaling the market was oversold. Today’s reading was 33.17.
Electronic trading volume on the Nymex was 327,597 contracts as of 3:01 p.m. Volume totaled 571,286 contracts yesterday, 8.2 percent above the three-month average. Open interest was 1.58 million.
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