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US Oil Price Hits 4-Month High on Brighter Economic View

Monday, 28 Jan 2013 03:48 PM

Oil advanced to a four-month high in New York Monday as orders for durable goods in the U.S. jumped, adding to economic optimism, and gasoline gained on the announcement that a New Jersey refinery will close.

Prices rose after the Commerce Department said orders rose 4.6 percent in December. Gasoline rose to a three-month high after Hess Corp. said it will shut the Port Reading, New Jersey, plant at the end of February.

“The durable goods number is very good and it bodes well for energy demand,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Gasoline is the strong market right now, and it’s been supportive for oil.”

West Texas Intermediate crude for March delivery rose 56 cents to settle at $96.44 a barrel on the New York Mercantile Exchange. Trading volume was 21 percent below the 100-day average at 3:22 p.m. WTI completed its seventh straight weekly gain, the longest run in almost four years, last week.

Brent for March gained 20 cents to settle at $113.48 a barrel on the London-based ICE Futures Europe exchange. Volume was 19 percent below the 100-day average. The European benchmark contract was at a premium of $17.04 to WTI. The gap was $17.40 on Jan. 25.

Growth in last month’s durable goods orders beat the median forecast of a 2 percent advance by economists surveyed by Bloomberg. Excluding demand for transportation equipment, which is often volatile, orders increased 1.3 percent, also beating the median projection.

“The durable goods number was pretty good and brought crude up,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.

Consumption Gains

Total petroleum consumption jumped 3.9 percent in the week ended Jan. 18 to 18.6 million barrels a day, the Energy Information Administration, the Energy Department’s statistics arm, said last week. Gasoline demand increased 1.3 percent to 8.43 million barrels a day.

Gasoline rallied after Hess said it plans sell its terminal network and leave the refinery business. The 70,000-barrel-a-day Port Reading refinery’s fluid catalytic cracker makes gasoline and components for blending heating oil.

Gasoline futures for February delivery advanced 5.94 cents, or 2.1 percent, to $2.9348 a gallon on the Nymex, the highest closing level since Oct. 11.

Egypt Clashes

Oil also rose as clashes flared for a fifth day in Egypt, near key Middle East production areas and distribution routes. About 50 people have died in Egyptian clashes since Jan. 25. President Mohamed Mursi instituted a state of emergency for 30 days in the provinces of Port Said, Suez and Ismailiya.

“The biggest concern about Egypt is that it will spread to other areas and the instability is adding to oil’s risk premium,” Flynn said.

The profits of Chinese industrial companies increased, possibly signaling more oil demand. The net income rose for a fourth month in December, the National Bureau of Statistics said Sunday. China uses more oil than any country except the U.S.

The nation’s economic growth will accelerate to 8.4 percent this year, the Chinese Academy of Sciences forecast Jan. 26 in its annual outlook. Gross domestic product increased 7.8 percent last year, government data show.

Hedge funds boosted bullish bets on U.S. crude for a sixth consecutive week. Money managers increased net-long positions, or wagers that crude will rise, by 15 percent in the week ended Jan. 22, according to the Commodity Futures Trading Commission’s Jan. 25 Commitments of Traders report.

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