Oil Rises First Day in Four on Signs U.S. Stockpiles Are Falling

Oil gained for the first time in four days in New York as signs stockpiles are shrinking in the U.S. stoked speculation demand is recovering in the world’s biggest crude consumer.

Futures advanced as much as 0.7 percent after the industry- funded American Petroleum Institute yesterday said inventories slid 354,000 barrels in the seven days ended Feb. 11. Energy Department data today may show stockpiles increased 2 million barrels. U.S. industrial production probably gained in January while European consumer confidence has improved, according to Bloomberg News surveys.

“Economic data in the U.S. and Europe are getting better than before and this is encouraging a lot of positive response from investors putting money into commodities,” said Ken Hasegawa, a commodity sales manager at broker Newedge in Tokyo. “Physically there’s no shortage of oil in the world.”

Crude for March delivery gained as much as 59 cents to $84.91 a barrel in electronic trading on the New York Mercantile Exchange. It was at $84.80 at 3:17 p.m. Singapore time. The contract slid to $84.32 yesterday, the lowest since Nov. 30. Prices have declined 8 percent this month and are 10 percent higher than a year ago.

Brent crude for April settlement advanced 50 cents, or 0.5 percent, to $102.14 a barrel on the ICE Futures Europe exchange in London today. It dropped $1.44, or 1.4 percent, to $101.64 a barrel yesterday.

Oil-supply totals from the API and DOE have moved in the same direction 75 percent of the time over the past four years. The Energy Department is scheduled to release its inventory report today at 10:30 a.m. in Washington.

Fibonacci Level

Futures in London may surge past $142 a barrel, to near the highest price ever, if futures close above a Fibonacci level at $104.98, according to technical analysis by brokers PVM Oil Associates Ltd. Brent climbed to a 28-month high of $104.30 on Feb. 14 as anti-government demonstrations in North Africa spread through the Arab world, renewing concern that Middle East crude supplies may be disrupted.

Demonstrators in Yemen clashed with police yesterday while Iranian security forces on Feb. 14 used tear gas to break up the biggest anti-government protests since June 2009. Fighting broke out in Bahrain before the funeral of one of two protesters killed this week, the official Bahrain News Agency said.

Iran is the second-largest producer in the Organization of Petroleum-Exporting Countries, pumping about 3.7 million barrels a day, according to Bloomberg data. Bahrain supplied about 32,000 barrels a day of crude in 2009 and 1.49 billion cubic feet of gas, according to the national oil and gas authority.

Brent-WTI

New York futures have outpaced London’s Brent this week, narrowing the spread between the benchmark prices. The difference between the April contracts was at $14.06 a barrel today, from $14.35 on Feb. 14. The March West Texas Intermediate contract in New York expires on Feb. 22.

The spread may shrink to $1 a barrel by year-end partly as political unrest in the Middle East dissipates, Commerzbank AG’s analysts said in a report yesterday.

“I’m concerned that the market is overbought,” said Newedge’s Hasegawa. “Such high oil pricesare not justified. For Brent, $105 would be the upper limit while $100 would be a support level.”

Brent’s 14-day relative strength index, which measures how fast prices have risen or fallen, advanced to 60.2 today, according to data compiled by Bloomberg. A reading of 70 or more signals to some traders that a market is “overbought.” WTI’s RSI was 35.6 yesterday, the lowest since Aug. 24. A level of 30 may be a sign prices have dropped too far, too fast.

U.S. Inventories

U.S. crude inventories probably rose for a fifth week in the seven days ended Feb. 11 as TransCanada Corp. completed an extension of a pipeline to Cushing, adding to the glut at the country’s biggest oil-trading hub, a Bloomberg News survey showed. TransCanada started deliveries to Cushing on Feb. 8 in the second phase of its Keystone pipeline project.

The Energy Department report may show gasoline stockpiles climbed 1.85 million barrels in the seven days ended Feb. 11, matching the longest streak of gains since August. The American Petroleum Institute said yesterday that inventories increased 1.24 million barrels to 241 million.

(Source: http://www.bloomberg.com/news/2011-02-15/oil-trades-near-11-week-low-in-n-y-on-forecasts-u-s-fuel-supply-to-rise.html)