Oil up on stimulus hopes
Oil traded near the highest level in three weeks amid speculation China and the US will add stimulus to their economies, sustaining demand for fuel in the world’s biggest crude users.
Futures were little changed after rising for a fifth day yesterday, the longest run of gains since July.
Chinese Premier Wen Jiabao signalled the government has more room for fiscal and monetary policy to support growth.
The Federal Open Market Committee starts a two-day meeting today, when it may announce measures to stimulate the US economy.
Fed Chairman Ben Bernanke said in August that he wouldn’t rule out more economic stimulus for the US.
The nation’s crude stockpiles probably fell 2.9 million barrels last week, a Bloomberg survey shows ahead of an Energy Department report.
‘‘The premier’s comments are supportive for the oil market,’’ said Ric Spooner, a chief market analyst at CMC Markets, in Sydney.
‘‘With the Fed, the issue is what they do and how big it’s going to be. Without supply shocks, we are probably fairly close to the top end of the range for oil.’’
‘‘The market is waiting on the outcome of the FOMC meeting and data from the Energy Department,’’ said David Lennox, an analyst at Fat Prophets, in Sydney.
Crude for October delivery was at $US97.06 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 1.23pm AEST.
The contract yesterday rose 0.7 per cent to $US97.17, the highest close since August 22. Prices are 1.8 per cent lower this year.
Brent oil for October settlement slid 2 cents to $US115.38 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark grade’s premium to West Texas Intermediate was at $US18.32, from $US18.23 yesterday.
The difference between the world’s two most-traded grades of oil, which widened to as much as $US21.92 last month, is narrowing as North Sea production rebounds from the lowest level in five years.
Daily exports of the four crude grades comprising the Dated Brent benchmark will rise 24 per cent in October, the biggest monthly increase in two years, as maintenance work ends, data compiled by Bloomberg shows.
Oil in New York slipped as much as 0.5 per cent earlier today after the industry-funded American Petroleum Institute said crude stockpiles rose 221,000 barrels last week.
Gasoline supplies declined 4.16 million barrel and distillate-fuel inventories rose 2.55 million, the API’s weekly report showed.
Supplies of oil are abundant and consumption will slow next year, the Organisation of Petroleum Exporting Countries (OPEC) said yesterday.
In its monthly market report, OPEC said that global demand will rise by an average 800,000 barrels a day to 89.55 million a day in 2013.
Demand is forecast to increase by 900,000 barrels a day to 88.74 million this year. The group estimates its 12 members will need to pump an average of 29.5 million barrels a day next year, or 1.9 million less than current output.
West Texas Intermediate will average $US93.67 a barrel during the final three months of this year, the Energy Department said in its Short-Term Energy Outlook yesterday. Prices will average $US92.63 a barrel next year, the department said.
Oil in New York has technical resistance along the upper Bollinger Band on the daily chart, around $US99.36 a barrel today, according to data compiled by Bloomberg.
Futures have halted advances near this indicator since July. Sell orders tend to be clustered near chart-resistance levels.