Oil headed for its first weekly gain in three as it traded near a one-week high in New York amid signs of economic recovery in the U.S., the world’s biggest crude consumer.
Futures were little changed after climbing for a second day yesterday. U.S. durable goods orders rose more than forecast in December, Commerce Department data yesterday showed, while a report this week showed gasoline demand increased the most in more than two months. Total SA Chief Executive Officer Christophe de Margerie said it would take a “real recession” to send Brent crude below $100 a barrel.
“To see a lower price of oil, below $100, you really would need to have a real recession, and I don’t think we will get a real recession,” de Margerie said in an interview on Bloomberg TV with Maryam Nemazee from Davos, Switzerland.
Crude for March delivery was up 21 cents at $99.91 a barrel in electronic trading on the New York Mercantile Exchange at 9:16 a.m. London time. Yesterday, the contract gained 30 cents to $99.70, the highest settlement since Jan. 19. Prices have climbed 1.5 percent this week and 17 percent in the past year.
Brent oil for March settlement on the London-based ICE Futures Europe exchange was at $111.13 a barrel, up 34 cents. The European benchmark contract was at a premium of $11.22 to West Texas futures. The spread shrank to $9.90 on Jan. 18 and reached a record $27.88 on Oct. 14.
Signs of Recovery
Crude in New York has technical support along its 50-day moving average, around $99.28 a barrel today, according to data compiled by Bloomberg. Futures slid to an intraday low yesterday of $99.23. Buy orders tend to be clustered near chart-support levels.
“The data we’ve seen out of the U.S. over the last few months is indicating a recovery in the economy,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney, said by telephone today. “The spread between Brent and West Texas has blown out again. That suggests the potential for some supply disruption out of the Middle East is in the back of traders’ minds.”
U.S. bookings for durable goods, or products meant to last at least three years, advanced 3 percent after rising 4.3 percent the prior month, the biggest back-to-back gains in almost a year, based on a Commerce Department report yesterday in Washington. A median 2 percent increase was predicted by 78 economists surveyed by Bloomberg News.
Fuel consumption rose 7.5 percent to 19.2 million barrels a day in the week ended Jan. 20, the largest gain since Nov. 4, the Energy Department said on Jan. 25.
Iran Sanctions
Oil has also risen this week amid concern European Union sanctions on Iran will curb supplies. EU foreign ministers agreed on Jan. 23 to ban petroleum imports from the Persian Gulf nation from July 1 to pressure the country over its nuclear program. Iranian President Mahmoud Ahmadinejad said his country is willing to revive talks on its nuclear plans and accused Western countries of dodging discussions, the state-run Fars news agency reported yesterday.
Iran has threatened to close the Strait of Hormuz in retaliation against the embargo. The waterway is a transit route for about a fifth of the world’s crude, according to the U.S. Department of Energy.
More than 70 percent of investors in a quarterly Bloomberg Global Poll said an attack on Iran’s nuclear facilities would create only a short-term disruption in crude markets. About a third of 1,209 global investors, traders and analysts surveyed from Jan. 23 to Jan. 24 said an attack could trigger an oil shock leading to a global recession.
