Hedge funds boosted bullish oil bets to the highest level in more than three months on signs that economic growth has accelerated in the U.S. and China, increasing demand, while supplies from the Middle East declined.
Money managers raised net-long positions, or wagers on the U.S. benchmark crude, by 12 percent in the week ended Jan. 8, according to the Commodity Futures Trading Commission’s Jan. 11 Commitments of Traders report. It was the most since Sept. 25.
Oil futures have advanced for five consecutive weeks as hiring picked up in the U.S. and Chinese exports increased. Saudi Arabia, the world’s largest crude exporter, cut output to a 19-month low of 9.025 million barrels a day in December, a person with knowledge of the kingdom’s policy said Jan. 10.
“Money managers have been encouraged by the increases in China’s oil demand as well as reductions in Saudi oil supply,” Andy Lipow, president of Houston-based consulting firm Lipow Oil Associates LLC, said by phone Jan. 11. “They feel the oil market is better balanced.”
West Texas Intermediate crude advanced $1.33 a barrel, or 1.4 percent, to $93.15 on the Nymex in the week covered by the report. The trading week was shortened by the New Year’s holiday. Futures were down 47 cents, or 0.5 percent, at $93.09 at 10:25 a.m. today.
Crude climbed 1.4 percent to three-month high on Jan. 2 after Congress passed a budget bill that averted more than $600 billion in automatic tax increases and budget cuts known as the fiscal cliff.
Prices slipped 0.2 percent on Jan. 3 after the Labor Department said jobless claims rose by 10,000 to 372,000. Analysts surveyed by Bloomberg forecast claims of 360,000.
Futures capped a weekly gain of 2.5 percent on Jan. 4, the biggest in more than three months, after a second Labor Department report showed that U.S. employers hired more workers than expected in December. Payrolls expanded by 155,000, exceeding analysts’ median prediction of 152,000.
Oil held steady Jan. 7 through Jan. 9 as rising stockpiles countered optimism that economic growth had strengthened. Crude inventories gained 1.31 million barrels to 361.3 million in the week ended Jan. 4, the U.S. Energy Information Administration reported on Jan. 9.
Domestic production averaged 7.002 million barrels a day in the week ended Jan. 4, the most since March 1993, according to the report from the Energy Department’s statistical arm. The boom in oil and natural gas output helped the U.S. meet 83 percent of its energy needs in the first nine months of the year, on pace to be the highest annual level since 1991, EIA data show.
Oil rose to a three-month high on Jan. 10 after reports showing Chinese exports expanded and European Central Bank President Mario Draghi said “a gradual recovery” should begin in the region this year. China’s customs agency said overseas sales jumped 14.1 percent in December from a year earlier. The country is the world’s second-largest fuel consumer.
The EIA raised its estimate of world oil consumption in its Jan. 8 Short-Term Energy Outlook to 90.1 million barrels a day in 2013 from a Dec. 11 forecast of 90 million.
At the same time, supplies from the Organization of Petroleum Exporting Countries have declined, according to a Jan. 11 report from Barclays Plc.
“The third-party estimates showed a reduction in Saudi Arabian output over December,” Miswin Mahesh, a London-based analyst for Barclays, said in the report. Exports from Iran and Iraq also slid, Mahesh wrote.
Futures dropped 0.3 percent on Jan. 11 after the National Bureau of Statistics in Beijing reported that the consumer price index advanced 2.5 percent in December from a year earlier. Rising inflation spurred speculation that the country will curb stimulus measures.
Net-long positions in WTI oil held by money managers, including hedge funds, commodity pools and commodity-trading advisers, jumped by 18,173 futures and options combined, or 12 percent, to 168,066, the CFTC report showed.
“It’s the new year, and money managers want to get that commodity exposure on their books,” Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania, said by phone Jan. 11. “The pattern has been for the past couple of years for the market to come on strong and then retreat.”
In other markets, hedge funds and other large speculators increased bullish gasoline wagers by 7,986 futures and options combined, or 12 percent, to 75,160. It was the largest jump since August.
Gasoline futures declined by 1.76 cents, or 0.6 percent, to $2.7944 a gallon in the week covered by the report and settled at $2.7395 on Jan. 11. Regular gasoline at the pump, averaged nationwide, rose 0.1 percent to $3.313 a gallon Jan. 10, the highest since Dec. 11, according to Heathrow, Florida-based AAA, the largest U.S. motoring group.
Money managers expanded bets on heating oil by 4,690 futures and options combined, or 17 percent, to 32,825, the highest since October, the CFTC report showed. Futures rose by 0.4 percent to $3.0585 a gallon in the week covered by the report, and closed at $3.0085 on Jan. 11.
Net-long wagers on four U.S. natural gas contracts advanced by 4,371 futures equivalents, or 7.8 percent, to 60,421 in the week ended Jan. 8, CFTC data show. It was the first increase in six weeks.
The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.
Natural gas slid 13.3 cents, or 3.9 percent, to $3.218 per million British thermal units on the New York Mercantile Exchange in the period covered by the report. Futures settled at $3.327 on Jan. 11.
In London, hedge funds and other money managers raised bullish positions on Brent crude by 10,925 contracts to the highest in more than nine months, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 150,036 lots in the week ended Jan. 8, the highest level since March 27, the London-based exchange said today in its weekly Commitment of Traders report. That’s the fourth consecutive weekly advance. Brent traded at $110.40 a barrel at 10:25 a.m. New York time.
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