Tags: Oil | 100 | Sales | Optimism

Oil Approaches $100 as U.S. Retail Sales Bolster Optimism

Tuesday, 15 Nov 2011 02:20 PM

Oil approached $100 a barrel in New York after U.S. retail sales increased more than projected in October, bolstering optimism that the economy of the largest crude-consuming country will expand this quarter.

Futures reached a three-month high in intraday trading after the Commerce Department said sales rose 0.5 percent last month. A 0.3 percent rise was forecast, according to the median of estimates in a Bloomberg News survey. The Energy Department may report tomorrow that U.S. oil and fuel supplies fell last week, a Bloomberg News survey showed.

“Oil at $100 gets people’s attention,” said David Greely, head of energy research at Goldman Sachs Group Inc. in New York. “We’ve been focused on what might happen, while what’s really happening is that demand is rising.”

Crude oil for December delivery rose $1.61, or 1.6 percent, to $99.75 a barrel at 1:43 p.m. on the New York Mercantile Exchange. Futures reached $99.80, the highest level since July 26.

Brent oil for December settlement, which expires today, increased 51 cents, or 0.5 percent, to $112.40 a barrel on the London-based ICE Futures Europe exchange. The January contract climbed 85 cents, or 0.8 percent, to $112.13.

The Federal Reserve Bank of New York’s general economic index rose to 0.6, the first positive reading since May, from minus 8.5 in October. Readings higher than zero signal the so- called Empire State Index is expanding. The bank covers New York, northern New Jersey, and southern Connecticut.

‘A Nice Bounce’

“Oil got a nice bounce off of the retail number,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The Empire State Index and wholesale price data were also supportive. Any data showing low inflation allows the Fed more freedom to take action to support the economy.”

The producer price index declined a more-than-projected 0.3 percent after a 0.8 percent gain in September, Labor Department figures showed today in Washington.

Futures fell earlier as Italy’s premier in waiting, Mario Monti, struggled to get political parties to help form his new cabinet. The euro area’s inability to contain its sovereign-debt crisis has led to a surge in Italian borrowing costs with yields on the country’s benchmark 10-year bonds climbing above 7 percent earlier today.

“If we avoid a meltdown in Europe, the stage is being set for a bull run,” Greely said. “If just Europe slips into recession but there’s no financial crisis with trade and the credit markets seizing up, the impact will be minimal.”

Bullish Bets

Hedge funds and other large speculators raised bullish bets on oil the most since May in the week ended Nov. 8, a Commodity Futures Trading Commission report showed yesterday. Wagers on rising prices increased 7.2 percent to 203,965 futures and options combined.

Futures in New York have settled above the 200-day moving average since Nov. 7, forming technical support. Crossing the threshold was a signal for technical traders to purchase contracts. The 200-day average stood at $95.16 today.

December crude oil options expire at the close of floor trading on the New York exchange today. The most actively traded oil option was the December $100 call, which gives investors the right to buy oil at that price. Those calls traded for 23 cents at 1:36 p.m., down from 88 cents yesterday.

U.S. crude oil stockpiles probably decreased 1.2 million barrels in the week to Nov. 11, according to the median of 12 analyst estimates in a Bloomberg News survey. Supplies of distillate fuel, a category that includes diesel and heating oil, fell 2.35 million barrels, the survey showed. Gasoline inventories dropped 1 million barrels, according to the survey.

U.S. total fuel demand surged 7.5 percent to 20 million barrels a day in the week ended Nov. 4, the highest level in three months, according to the department.

The industry-funded American Petroleum Institute in Washington will release its supply data today.

Oil volume in electronic trading on the Nymex was 476,146 contracts as of 1:27 p.m. in New York. Volume totaled 710,085 contracts yesterday, 7.1 percent above the three-month average. Open interest was 1.38 million contracts.


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Oil approached $100 a barrel in New York after U.S. retail sales increased more than projected in October, bolstering optimism that the economy of the largest crude-consuming country will expand this quarter.Futures reached a three-month high in intraday trading after the...
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2011-20-15
 

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