Crude oil heads for biggest weekly gain in a month

The Pak Banker - - Company& -

SINGAPORE: Oil headed for its biggest weekly gain in a month on spec­u­la­tion that U.S. fuel de­mand will in­crease as the eco­nomic re­cov­ery gath­ers pace in the world's biggest oil con­sumer.

Fu­tures trimmed yes­ter­day's 1.4 per­cent rally as traders sought to profit af­ter the high­est close in two years. Crude has climbed 4.7 per­cent this week, the most since the pe­riod end­ing Nov. 5, as data showed U.S. home sales in­creased and man­u­fac­tur­ing ex­panded. A La­bor Depart­ment re­port to­day may in­di­cate the U.S. hired more work­ers for a sec­ond month.

"The mar­ket is go­ing to be fo­cused on what hap­pens tonight with the un­em­ploy­ment num­ber," said Jonathan Bar­ratt, man­ag­ing di­rec­tor of Com­mod­ity Broking Ser­vices Pty in Syd­ney. "Oil is com­ing back a lit­tle bit be­cause of profit-tak­ing."

The Jan­uary con­tract was at $87.79 a bar­rel, down 24 cents, or 0.2 per­cent, in elec­tronic trad­ing on the New York Mer­can­tile Ex­change at 2:16 p.m. Singapore time. It closed yes­ter­day at $88 a bar­rel, the high­est since Oc­to­ber 2008.

U.S. em­ploy­ers added 150,000 work­ers last month, a Bloomberg sur­vey showed be­fore the La­bor Depart­ment re­port to­day. Data yes­ter­day showed pend­ing sales of U.S. ex­ist­ing houses un­ex­pect­edly jumped by a record 10 per­cent in Oc­to­ber, while claims for job­less ben­e­fits over the past month on av­er­age dropped to a two-year low.

Brent crude for Jan­uary set­tle­ment was at $90.64 a bar­rel, down 5 cents, on the London-based ICE Fu­tures Europe ex­change. The con­tract in­creased $1.82, or 2 per­cent, to end the ses­sion yes­ter­day at $90.69, the high­est close since Oct. 1, 2008.

Brent crude for next month is trad­ing at a 4-cent pre­mium to the Fe­bru­ary fu­ture, a mar­ket sit­u­a­tion known as back­war­da­tion that sug­gest prompt sup­plies are more in de­mand than later de­liv­er­ies.

De­mand for Euro­pean crude has in­creased as de­clin­ing tem­per­a­tures in the re­gion boost heat­ing oil con­sump­tion. The pre­mium of gasoil, an­other term for the fuel, climbed to $11.61 above Brent crude, from $10.81 yes­ter­day, ac­cord­ing to ICE data.

"The fall­ing tem­per­a­tures and the snow­ing in Europe is a fac­tor in cre­at­ing stronger crack spreads," said Ken Hasegawa, a com­mod­ity de­riv­a­tives sales man­ager at bro­ker Newedge in Tokyo. "That's cre­at­ing lo­cal de­mand for crude."

Oil an­a­lysts sur­veyed by Bloomberg News were split over the di­rec­tion of crude oil prices next week. Ten of 28 an­a­lysts, or 36 per­cent, fore­cast crude will ad­vance through Dec. 10. Ten more re­spon­dents pre­dicted that fu­tures will be steady. -Bloomberg

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