Bloomberg News

WTI Crude Heads for First Weekly Gain as U.S. Payrolls Increase

June 07, 2013

West Texas Intermediate headed for its first weekly gain in a month after employment increased more than forecast in the U.S., the biggest crude consumer.

Futures gained as much as 0.6 percent, and have advanced 3.5 percent this week. U.S. payrolls rose 175,000 last month, Labor Department figures showed today in Washington. That was more than a median forecast in a Bloomberg survey for a 163,000 gain. WTI’s discount to the European benchmark, Brent, widened for the first time in three days. WTI may slide next week, according to a separate Bloomberg survey.

“The U.S. recovery has been broadly on track so far,” said Amrita Sen, chief oil market analyst at Energy Aspects Ltd., a consulting company in London. “The labor market is healing and the economy is slowly getting better.”

WTI for July delivery rose to $95.27 three minutes after the release of jobs data, before paring gains to trade at $94.84 a barrel, up 8 cents, in electronic trading on the New York Mercantile Exchange as of 1:48 p.m. London time. The volume of all futures traded was 6 percent above the 100-day average. The contract rose $1.02 to $94.76 yesterday, the highest close since May 28.

Brent for July settlement was up 46 cents at $104.07 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $9.08 to WTI, compared with $8.85 yesterday.

Economic Recovery

WTI has technical support along its 50-week moving average, around $91.95 a barrel today, according to data compiled by Bloomberg. Futures have halted intraday declines near this indicator the past two weeks. Buy orders tend to be clustered close to chart-support levels.

U.S. employment increased more than forecast in May and the jobless rate climbed from a four-year low as more Americans entered the labor force, showing the world’s largest economy weathered the effects of higher taxes and federal budget cuts.

Payrolls rose 175,000 last month after a revised 149,000 increase in April that was smaller than first estimated, Labor Department figures showed today in Washington. The unemployment rate rose to 7.6 percent from 7.5 percent.

WTI may decline next week, a Bloomberg News survey showed. Fourteen of 34 analysts and traders, or 41 percent, forecast prices will retreat through June 14. Twelve respondents, or 35 percent, predicted an increase. Eight projected no change.

The Organization of Petroleum Exporting Countries will curb crude shipments through most of this month as demand from Asian refiners drops during seasonal maintenance, according to Oil Movements, a tanker tracker. OPEC, which supplies about 40 percent of the world’s oil, will ship 23.7 million barrels a day in the four weeks to June 22, down 1 percent from 23.93 million in the previous period ended May 25, the researcher said in an e-mailed report yesterday.

Tropical Storm

Tropical Storm Andrea is gaining speed after making landfall in Florida yesterday, the U.S. National Hurricane Center said today. The storm, which formed June 5 in the Gulf of Mexico, is located 65 miles south-southwest of Savannah, Georgia, and is moving northeast at 19 miles per hour, the center said. The Atlantic hurricane season began June 1 and ends Nov. 30. Forecasters expect more than 12 storms, the 30-year average, will form in the Atlantic this year.

WTI’s specifications will change as early as the end of this year to ensure the quality of the world’s most-actively traded energy contract, according to CME Group Inc., which owns Nymex. The Crude Oil Quality Association, an industry group, recommended adjustments to the light, sweet grade in 2010 that will form the basis of the move, Damon Leavell, a CME spokesman in New York, said by phone yesterday.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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