Crude oil traded near a two-week high in New York on optimism fuel demand will increase amid improved prospects for an economic recovery in the world’s largest energy consumer. Oil rose 2.9 percent yesterday as U.S. stocks gained for the sixth consecutive days after Alcoa Inc. earnings topped analysts’ estimates. Prices also rose as the International Energy Agency expects oil demand will grow in 2011. U.S. crude inventories probably fell last week, according to a Bloomberg News survey before a government report today.
“Oil price is fascinated with equities, so the strong performance in U.S. stocks yesterday had much to do with the rally,” said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. “In the short term, much will depend on the reports of corporate profits in the second quarter.”
Crude oil for August delivery traded at $ 76.99 a barrel, down 16 cents, in electronic trading on the New York Mercantile Exchange at 11:18 Singapore time. Yesterday, the contract jumped $ 2.20 to $ 77.15, its highest level since June 28. Futures have gained 2.6 percent since the beginning of the year.
“Sentiment has changed positively and share resources and take advantage of that,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. “It is the beginning of the quarterly earnings season, which kicked off is on a positive note with Alcoa.”
Global oil demand will rise 1.6 percent in 2011 to an average 87.8 million barrels per day, the Paris-based IEA said in its first forecast for next year. It left its forecast for 2010 unchanged with an increase in demand of 2.1 percent to an average 87.8 million barrels per day in a report released yesterday.
U.S. demand for gasoline rose 2.1 percent for June 30 to July 6, the Tuesday after the holiday 04.07, a year earlier, according to MasterCard Inc. ‘s Spending Pulse report yesterday.
Crude Supplies
U.S. crude oil inventories rose 1.74 million barrels to 353.5 million last week, according to a report by the American Petroleum Institute. The Energy Department will likely report that inventories 1.5 million barrels, a Bloomberg News survey of 14 analysts shows fell.
Crude inventories at Cushing, Oklahoma, the delivery point for New York futures rose 316,000 barrels to 36.1 million. Gasoline and distillate fuel stocks also rose.
The Petroleum Institute collects inventory information on a voluntary basis to operators of refineries, bulk terminals and pipelines. The government requires that reports be submitted to the Energy Department for the weekly poll.
Earnings for the S & P 500 companies are expected to have increased 34 percent in the second quarter, according to analysts estimates compiled by Bloomberg. Alcoa, the largest aluminum producer, reported a net profit of 136 million U.S. dollars, or 13 cents a share, 11 cents above the average estimate of 17 analysts surveyed by Bloomberg.
Brent Curve
Brent crude for August settlement was at $ 76.43 a barrel, down 22 cents, on London-based ICE Futures Europe exchange at 11:14 Singapore time. The contract earlier rose as much as 31 cents, or 0.4 percent, to $ 76.96. Yesterday was $ 2.28, or 3.1 percent, to settle at $ 76.65.
The August contract expires tomorrow. The more active September contract was at $ 76.59 a barrel, down 14 cents at 10:57 Singapore time.
The Brent August contract discount to September was reduced to 8 cents per barrel, the lowest since 14.08. The market structure where prices more slowly than later-dated futures is known as contango.
Contango in the West Texas oil futures traded in New York has also narrowed. The price difference between the contract in August and September was reduced to 45 cents a barrel today from $ 4.59 per barrel on May 14
“The main mechanism for the pricing of a tightening in the fundamental picture has the shape of the curve,” said Amrita Sen, an analyst at Barclays Capital in a note yesterday. “Both WTI and Brent spreads quickly tightened yesterday. With our expectation of further growth in the future, we would expect that the process of flattening curve to continue.”
source:bloomberg
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