Oil fluctuated in New York as the U.S. economy unexpectedly shrank in the fourth quarter and the euro strengthened against the dollar.
Prices were steady as the Commerce Department reported gross domestic product dropped at a 0.1 percent annual rate, weaker than any forecast in a Bloomberg survey. The euro rose above $1.35 for the first time since December 2011, boosting dollar-denominated oil’s appeal as an alternative investment.
“The unexpected drop in GDP is a very large surprise and is what hit the oil market,” said Tom Doremus, an analyst at Tradition Energy in Stamford, Connecticut. “A weakening U.S. dollar will provide some support to crude prices.”
West Texas Intermediate for March rose 22 cents to $97.79 at 9:31 a.m. on the New York Mercantile Exchange. Trading was 27 percent above the 100-day average for the time of day. Oil has gained 6.5 percent this month.
Brent for March settlement added 19 cents to $114.55 a barrel on the London-based ICE Futures Europe exchange. Trading was 14 percent above the 100-day average for the time of day. The European benchmark grade’s premium to WTI narrowed 3 cents to $16.76.
The fourth-quarter GDP showed the worst performance since the second quarter of 2009, when the world’s largest economy was still in recession. A decline in government outlays and smaller gain in stockpiles subtracted a combined 2.6 percentage points from growth.
The euro strengthened as much as 0.5 percent to $1.3563 after a report showed economic confidence in the region improved more than analysts predicted this month. The dollar also weakened as the Federal Reserve may renew its commitment to buying assets during a two-day meeting ended today, according to a Bloomberg survey of 44 economists.
The Energy Information Administration, the Energy Department’s statistics arm, may say today that crude supplies increased by 2.5 million barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg.
Stockpiles rose for a fourth week by 4.16 million barrels to 368.2 million last week, the highest level in more than a month, the industry-funded American Petroleum Institute said yesterday.
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