Arab Today, arab today oil climbs to fivemonth high as supplies counter debt concern
Last Updated : GMT 06:58:51
Arab Today, arab today
Arab Today, arab today

Oil climbs to five-month high as supplies counter debt concern

Arab Today, arab today

Arab Today, arab today Oil climbs to five-month high as supplies counter debt concern

New York - Bloomberg

Oil rose to a five-month high in New York as signs of shrinking stockpiles in the U.S. countered concern Europe’s debt crisis will damp fuel demand. Futures climbed as much as 0.8 percent, reversing an earlier 1 percent drop. U.S. crude inventories declined for a second week, according to the Energy Department. Oil surged yesterday after Enbridge Inc. said it will reverse the direction of the Seaway pipeline, adding an outlet to transport from the central U.S. and Canada to the coast of the Gulf of Mexico. A rise in Spanish and Italian bond yields stoked speculation Europe is failing to contain its debt crisis. “The market should oscillate around $100 for a while,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who sees resistance to prices at $102. “Overhanging the market is the concern that this contagion in Europe will continue to flare up.” Crude for December delivery gained as much as 78 cents to $103.37 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest intraday price since May 31. The contract was at $103.06 at 4:19 p.m. Singapore time. Yesterday, it climbed $3.22 to settle at $102.59, the highest since May 31. Prices have gained 13 percent this year, after increasing 15 percent in 2010. Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $111.79 a barrel, down 9 cents. The European contract was $8.70 higher than West Texas Intermediate crude, the smallest premium since March 8. The spread is down 69 percent from a record $27.88 on Oct. 14. U.S. Supplies Enbridge and Enterprise Products Partners LP, the other owner of the 500-mile (804.5-kilometer) Seaway pipeline, will reverse the north-flowing line that extends from Houston-area refineries on the Gulf of Mexico to Cushing, Oklahoma. This may reduce stockpiles from the storage depot by opening access to refiners on the Texas coast. Goldman Sachs Group Inc. said Brent’s premium to West Texas will shrink to $6.50 a barrel sooner than it had estimated, citing the reversal of the pipeline. The spread will narrow to that level in six months, half the period the bank forecast previously, David Greely, a New York-based managing director, said in an e-mailed report. Supplies at Cushing increased for the fifth time in six weeks, rising to 32 million barrels in the period to Nov. 11, according to yesterday’s Energy Department report. Chart Resistance Total U.S. crude inventories dropped 1.1 million barrels to 337 million, the report showed. Gasoline supplies rose 992,000 barrels, near a median 1 million-barrel gain predicted by analysts in a Bloomberg News survey. Distillate-fuel stockpiles, including diesel and heating oil, fell 2.1 million barrels to 133.7 million. Oil has technical resistance at $103.39 a barrel, near where yesterday’s rally was halted, according to data compiled by Bloomberg. On the weekly chart, that’s the 61.8 percent Fibonacci retracement of the intraday decline to $32.40 in December 2008 from a record high of $147.27 in July that year. The 14-day relative strength index climbed above 70 for the first time since April 8, signaling further gains aren’t sustainable. The reading was 73.5 today. The U.S. is the world’s largest oil consumer, using 19.1 million barrels a day in 2010, or 21 percent of global demand, according to BP Plc’s annual Statistical Review. The European Union consumed 16 percent.

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