By Grant Smith
Oil headed for the longest run of weekly gains since April 2009, on speculation that signs of U.S. economic growth and Europe’s steps to contain its debt crisis will support fuel demand.
Crude climbed as much as 0.8 percent in New York and is poised for a sixth weekly increase. The number of Americans filing applications for unemployment benefits fell to a seven- month low, a Labor Department report showed yesterday. Italy’s Senate approved a key budget bill today to clear the way for new leadership, while Greece formed a unity government.
“Tightening supplies in the U.S. could be one explanation,” said Carsten Fritsch, an analyst in Frankfurt at Commerzbank, the fourth most-accurate forecaster of Brent prices in the third quarter. “Additionally, the debt crisis seems to fade with the new government in Greece, and maybe Italy as well. But this should be only temporary.”
Crude for December delivery on the New York Mercantile Exchange rose as much as 75 cents to $98.53 a barrel, the highest intraday price since Aug. 1. It was at $98.21 at 1:32 p.m. London time. Prices are up 4.2 percent this week.
Brent crude for December settlement on the London-based ICE Futures Europe exchange was up 50 cents at $114.21 a barrel. The European benchmark contract was at a premium of $16 to New York futures, after settling yesterday at $15.93, the lowest level since June 27.
Technical Support
“There is a lot of uncertainty but due to technical strength, the market may try to test $100 anyway,” said Ken Hasegawa, a commodity-derivatives trading manager at Newedge Group in Tokyo, a broker. “Fundamentally, the world’s inventory of crude and products has been decreasing. That is also a support factor.”
Crude in New York has technical support along its 200-day moving average, around $95 a barrel today, according to data compiled by Bloomberg. That is close to the 50 percent Fibonacci retracement of the drop from this year’s high of $114.83 in May to the low of $74.95 in October.
Oil’s rise above $95 a barrel this week was “the key point” that may determine if futures will trade in triple digits, according to Hasegawa. Futures last settled higher than $100 on June 9.
Crude may fall next week as Europe’s debt crisis damp the outlook for global demand, a Bloomberg News survey showed. Nineteen of 33 analysts and traders, or 58 percent, forecast oil will decline through Nov. 18. Ten, or 30 percent, projected a gain, and four said there will be little change. Last week, 61 percent of those polled predicted a price drop.
“The euro debt crisis is the negative, and risks remain to the downside,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna, the fifth most-accurate forecaster of Brent prices in the eight quarters to June. “China imports are still robust, though the dynamic is losing pace.”
–With assistance from Yee Kai Pin in Singapore. Editors: John Buckley, Raj Rajendran
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 on sev@bloomberg.net