Oil rose in New York, heading for a second week of gains, on speculation that the US Federal Reserve may take more steps to stimulate the economy and on the Organisation of Petroleum Exporting Countries’ (Opec) call for members to cut production in excess of quotas.
Futures climbed as much as 1.1 per cent, a consecutive advance. Reports yesterday showed US jobless claims unexpectedly increased and the cost of living fell the most in three years.
Opec needs to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary-General Abdalla El-Badri said.
“There are more supportive factors now for oil than there are negative,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “The whole purpose of the cartel is to provide guidelines to production. Compliance is just a word. If the price slips below $80 a barrel then quotas will change and give prices a big bump.”
Oil for July delivery rose as much as 89 cents to $84.80 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.68 at 2:54 pm Singapore time. The contract increased 1.6 per cent yesterday to $83.91, the highest settlement since June 8. Prices are 0.7 per cent higher this week and down 14 per cent in 2012.
Brent crude for August settlement on the London-based ICE Futures Europe exchange climbed as much as 93 cents, or 1 percent, to $98.10 a barrel. The European benchmark contract was at a premium of $13.10 to New York crude. The gap was $13.12 yesterday, the narrowest close since May 2.
Oil in New York is extending gains after yesterday’s rebound created a so-called bullish engulfing pattern on the daily candlestick chart, according to data compiled by Bloomberg. Crude has long-term technical support along its 200- week moving average, around $80.81 a barrel. Buy orders tend to be clustered near chart-support levels.
OPEC kept its output limit at 30 million barrels a day at a meeting in Vienna yesterday as concern global growth is shrinking outweighed calls by some members for supply cuts to stem sliding prices. Increased production from Saudi Arabia, the world’s biggest oil exporter, has been blamed for the drop in prices by members including Iran, whose own exports will probably be curbed by a European Union embargo scheduled to start July 1. OPEC’s 12 members pump about 40 percent of the world’s crude.
South Korea’s crude imports from Iran in May fell 40 percent from a year earlier, the customs service said on Friday. The world’s fifth-largest oil importer purchased 550,714 metric tons, or about 17,765 tons a day, from Iran last month, compared with 911,889 tons a year earlier, according to the service’s website.
Claims for unemployment insurance payments in the U.S. unexpectedly climbed by 6,000 to 386,000 in the week ended June 9, Labor Department figures showed yesterday. Economists surveyed by Bloomberg News projected claims would fall to 375,000. The cost of living in the world’s largest oil-consuming nation declined 0.3 percent in May.
Oil in New York may fall next week on speculation Europe’s debt crisis will spread after the downgrade of Spain’s credit rating and weekend elections in Greece, a Bloomberg News survey showed. Seventeen of 39 analysts and traders, or 44 percent, forecast crude will decline through June 22. Fifteen respondents, or 38 percent, predicted futures will increase and seven said there will be little change.
China is hoarding crude at the fastest rate since the Beijing Olympics four years ago as oil’s slump prompts the country to import unprecedented volumes, even as refining slows.
The world’s second-biggest oil consumer built a surplus of about 90 million barrels of crude in the first five months of the year, government data show. The excess, the highest since the run-up to the 2008 games, is probably being kept at emergency and commercial storage centers, according to the International Energy Agency.