Oil rose in New York, trimming its weekly decline, on signs of growing fuel demand in the world’s two biggest crude-consuming nations.
July delivery futures climbed as much as 1.2 percent following a 1.6 percent drop yesterday. U.S. jobless claims fell by a more-than-forecast 29,000 in the week ended May 14, according to the Labor Department. China’s diesel demand may climb as factories turn to the fuel this summer for power generation amid electricity rationing, Barclays Capital said.
“Oil is tracking macroeconomic events,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “With volumes pretty low we’re likely to remain within a narrow trading range, capped at about $114 for Brent, provided no fresh geopolitical jitters emerge.”
Crude for July delivery, the most active contract for West Texas Intermediate, rose as much as $1.16 to $100.09 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.19 at 12:54 p.m. London time. The June contract, which expires today, gained 30 cents to $98.74. Futures are 0.9 percent lower this week and up 45 percent in the past year.
Brent crude for July settlement was at $111.35, down 17 cents, at $111.25 a barrel on the London-based ICE Futures Europe exchange. It slipped 88 cents to $111.42 a barrel yesterday, the lowest settlement since May 17.
German Growth
Oil pared earlier gains after Germany’s Bundesbank said Europe’s largest economy will probably lose some growth momentum. The dollar gained 0.6 percent against the euro, reducing the appeal of commodities price in the U.S. currency.
European benchmark Brent traded at a premium of $12.05 a barrel to U.S. futures, compared with $12.49 yesterday. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21 as unrest spread in the Middle East and North Africa and stockpiles climbed at Cushing. The spread averaged 76 cents last year.
A gauge of the outlook for the U.S. economy for the next three to six months slid for the first time since June and sales of existing U.S. homes unexpectedly declined, reports showed yesterday.
“The market is still divided about the economic numbers out of the U.S.,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 this year.
The longest decline in the profit from producing diesel in Asia since August 2008 may be ending as China’s worst energy shortage in seven years forces factories to rely on the fuel to power generators, a Bloomberg survey showed.
China Demand
The return from processing crude into diesel, known as the crack spread, is likely to stay at about $18 a barrel through the summer after tumbling 24 percent over the past six weeks, according to the median estimate of four traders and refiners surveyed by Bloomberg News. The spread was $17.38 yesterday.
Diesel demand in China may increase 6.5 percent this year to 3.35 million barrels a day as manufacturers use the fuel in generators, according to the International Energy Agency. China is rationing electricity as utilities cut output because of rising coal costs and government price caps at the same time as supplies are curbed by the lowest water levels since 2003 on the Yangtze River, site of the world’s biggest hydropower dam.
Crude oil may rise next week as economic growth bolsters fuel demand in the U.S., the biggest oil-consuming country, a Bloomberg News survey showed.
Eighteen of 43 analysts, or 42 percent, forecast oil will increase through May 27. Fifteen respondents, or 35 percent, predicted prices will decline and 10 projected little change.
OPEC will raise exports by the most since mid-February this month to meet growing demand from Asia, according to tanker tracker Oil Movements. The Organization of Petroleum Exporting Countries will ship 22.91 million barrels a day in the four weeks to June 4, up 1.9 percent from 22.49 million in the period ended May 7, the consultant said yesterday in a report.
The International Energy Agency said yesterday that oil producers need to increase supplies as prices are threatening the global economic recovery. OPEC is next due to meet on June 8 in Vienna.
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