Oil climbed in New York on optimism fuel demand will increase amid improved prospects for an economic recovery in the US and Japan, the world’s biggest and third-largest crude consumers.
Futures reversed yesterday’s 0.6 per cent decline as US equities rose after a bigger-than-estimated drop in US jobless claims. Asian stocks climbed today as Japan’s economic growth was revised higher. Prices also gained after Enbridge Energy Partners LP shut a pipeline that can carry more than one-third of crude imports to the US Midwest because of a leak.
“The equity markets climbed relatively well after better-than-expected unemployment numbers coming out of the US and oil has just bounced,” said Peter McGuire, managing director at CWA Global Markets in Sydney.
The October contract rose as much as 72 cents, or 1 per cent, to $US74.97 a barrel in electronic trading on the New York Mercantile Exchange, and was at $US74.73. Yesterday, it lost 42 cents to $US74.25. Prices are 0.2 higher for the week and down 5.9 per cent this year.
US crude oil stockpiles fell 1.85 million barrels to 359.8 million last week, a report from the Energy Department showed. Supplies were forecast to climb by 1 million barrels, according to a Bloomberg News survey.
Initial jobless claims dropped in the US by 27,000 to 451,000 last week, according to Labor Department figures, compared with the median economist estimate of 470,000 in a Bloomberg survey.
Japanese growth
Japan’s gross domestic product grew at an annualized 1.5 per cent rate in the three months ended June 30, a Cabinet Office report showed, faster than the 0.4 per cent reported last month. The figure matched the median of 21 estimates in a Bloomberg News survey of economists.
China posted a third straight trade surplus of $US20.03 billion in August, the customs bureau said on its website, compared with $US15.7 billion for the same month a year earlier. The median estimate in a Bloomberg News survey of 34 economists was $US26.9 billion. Exports climbed 34.4 per cent, while imports grew a more-than-forecast 35.2 per cent.
The Organization of Petroleum Exporting Countries said yesterday in a monthly report that global consumption may weaken during the rest of this year because of “the severity of the economic crisis and its prolonged impact on the world economy.”
The group predicted that the world will need 28.8 million barrels of oil a day from its 12 members next year. That’s about 100,000 barrels less than in last month’s report. OPEC supplies about 40 per cent of the world’s crude oil.
Pipeline leak
Enbridge’s Line 6A is part of its Lakehead system, which can carry 670,000 barrels a day of oil from Canada to refineries in the US Midwest, according to a company website. Crews are investigating the situation, said Glenn Herchak, a company spokesman. He declined to provide information on what the line was carrying and if it was at full rates.
Inventories of distillates, a category that includes heating oil and diesel, declined 388,000 barrels to 175 million last week, the Energy Department report showed. Supplies were forecast to increase 700,000 barrels, according to the Bloomberg News survey.
Gasoline supplies declined 243,000 barrels to 225.2 million. Stockpiles were forecast to fall 1 million barrels, according to the median of responses from the Bloomberg News survey.
“The oil market will probably head sideways for the week ahead, I don’t see anything to really push it higher,” CWA’s McGuire said.
Brent crude for October settlement lost as much as 36 cents, or 0.5 per cent, at $US77.11 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it slipped 70 cents, or 0.9 per cent, to end the session at $US77.47.