Oil heads for weekly decline

NEW YORK

Oil headed for the fourth weekly decline in five in New York as signs of a slowing economy in the U.S., the world’s biggest crude user, countered concern that tension in the Middle East may disrupt supplies.

West Texas Intermediate futures were little changed after falling 1 percent yesterday as a report showed U.S. unemployment claims climbed at the highest level since April 2011. Crude stockpiles climbed last week to the highest since July as output rose to an 18-year high, according to the Energy Department. Oil pared losses after Israel said it’s ready to escalate military operations against Gaza.

“Supplies are overwhelming while demand is non-existent,” said Andrey Kryuchenkov, an analyst at VTB Capital, who predicts WTI may slip to $84 a barrel this month. “Geopolitical risks are hopefully going to subside, and so ultimately macroeconomic and demand concerns will still dominate the agenda.”

Crude for December delivery, which expires today, rose 5 cents to $85.50 a barrel in electronic trading on the New York Mercantile Exchange at 8:43 a.m. London time. The January contract gained 6 cents to $85.93. The front-month future dropped 87 cents yesterday to $85.45 and is down 0.7 percent this week. Prices have lost 14 percent this year. Brent for January settlement on the London-based ICE Futures Europe exchange increased 24 cents to $108.25 a barrel. The front-month European benchmark grade was at premium of $22.33 to the corresponding WTI contract, from $25.53 yesterday.

Oil in New York remains in a downtrend channel on the daily chart, signaling price advances may not be sustainable, compiled by Bloomberg show. Futures have traded between the middle and lower Bollinger Bands for almost two months. These indicators, representing technical resistance and support levels respectively, are around $87.80 and $82.30 a barrel today.