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Oil Advances On U.S. Economic Outlook

By on August 13, 2012

Oil rose in New York, adding to a second weekly gain, before a report that may show signs of economic improvement in the U.S., the world’s biggest crude consumer.

Futures climbed as much as 0.9 percent, extending the 1.6 percent advance last week. Retail sales probably increased 0.3 percent in July for the first rise in four months, according to a Bloomberg News survey of economists before Commerce Department data tomorrow. Hedge funds raised bullish bets on oil by the most in more than 17 months.

“The U.S. is clearly in recovery,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “The move above the high that we saw in mid-July of almost $93 has pushed us into a higher trading range and we expect to test $98 reasonably soon, over the next week, or two weeks.”

Oil for September delivery increased as much as 87 cents to $93.74 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.36 at 1:19 p.m. Singapore time. It fell 49 cents to $92.87 on Aug. 10. Prices are 5.5 percent lower since the start of the year.

Brent crude for September settlement gained 80 cents, or 0.7 percent, to $113.75 a barrel on the London-based ICE Futures Europe exchange. The more-actively traded October contract rose 75 cents to $111.86 a barrel. The European benchmark’s premium to West Texas Intermediate was at $20.35 after closing at $20.08 on Aug. 10, the widest gap since April.

The increase in the spread between the two crudes has gained amid maintenance shut downs at the North Sea fields that are the physical basis of the Brent future. BP Plc (BP/) on Aug. 10 said it will close its Ninian pipeline in the area for 10 days.

Bullish Bets

Money managers boosted net-long positions, or wagers that crude will climb, by 20 percent in the seven days ended Aug. 7, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Aug. 10. It was the biggest jump since March 1, 2011, when Libyan output plummeted as the civil war intensified.

The U.S. Navy said yesterday one of its guided-missile destroyers collided with an oil tanker near the Strait of Hormuz, a transit route for about a fifth of the global crude shipments. The collision between USS Porter and the Panamanian- flagged bulk oil tanker M/V Otowasan occurred at about 1 a.m. local time, Bahrain-based U.S. 5th Fleet spokesman Lieutenant Greg Raelson said yesterday. The incident was not combat-related and damage to the ship is being evaluated, he said.

“It does raise the main issue in this area,” Dominick Chirichella, a senior partner at the Energy Management Institute in New York, said in a note to clients. “A large number of military vessels are patrolling the area which as we have seen increases the possibility of accidents and thus the potential to slow the flow of traffic through this area.”

Iraq Output

Iraq’s crude production climbed to 3.2 million barrels a day and will increase as planned to 3.4 million barrels daily by year’s end, Deputy Prime Minister for Energy Affairs Hussain al- Shahristani said. The country’s output has now surpassed that of Iran and Kuwait, al-Shahristani said yesterday in Baghdad. It would be the highest level in more than 20 years.

The average price for regular gasoline at U.S. filling stations rose 18.38 cents in the past two weeks, the largest gain of the year, to $3.6896 a gallon, according to Lundberg Survey Inc.

The survey covers the period ended Aug. 10 and is based on information obtained from about 2,500 stations by the Camarillo, California-based company. The average is up 7.86 cents from a year earlier. Gasoline is 27.75 cents below the year-to-date high of $3.9671 on April 6.