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Dec. 5 (Bloomberg) -- West Texas Intermediate was little changed as faster-than-expected U.S. growth spurred speculation that the Federal Reserve will curb stimulus spending.
Prices traded within a 71-cent range. The U.S. expanded at a 3.6 percent annualized rate last quarter, up from an initial estimate of 2.8 percent, Commerce Department figures showed today. The Fed has said it will slow the pace of asset purchases if the economy improves in line with its forecasts. WTI’s discount to Brent shrank to the tightest level in two weeks.
“A better economy will lead to stronger oil demand and higher prices, but it also increases expectations of Fed tapering, which is bearish for the market,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
WTI for January delivery rose 21 cents to $97.41 a barrel at 10 a.m. on the New York Mercantile Exchange after climbing to $97.72, the highest intraday level since Oct. 30. The volume of all futures traded was about 13 percent below the 100-day average.
Brent dropped 53 cents, or 0.5 percent, to $111.35 a barrel on the London-based ICE Futures Europe exchange. Volume was 21 percent below the 100-day average. WTI’s discount to Brent touched $13.86, the narrowest level since Nov. 21.
Gross domestic product was the strongest since the first quarter of 2012, the Commerce Department figures showed. The median forecast of 77 economists surveyed by Bloomberg predicted a 3.1 percent gain.
Applications for unemployment benefits unexpectedly fell. The jobless claims decreased 23,000 to 298,000 in the week ended Nov. 30, the Labor Department said today. The reading, which included the week of Thanksgiving, was the lowest since the first week in September when the Labor Day holiday played havoc with the figures.
The Fed may pare $85 billion in monthly bond purchases as the economy improves “in coming months,” minutes of the Federal Open Market Committee’s Oct. 29-30 meeting showed. They were released on Nov. 20.
U.S. crude inventories declined for the first time in 11 weeks in the seven days ended Nov. 29, the Energy Information Administration said yesterday. Supplies at Cushing, Oklahoma, the delivery point for WTI, decreased 18,000 barrels to 40.6 million, according to the EIA, the Energy Department’s statistical arm. It was the first drop in eight weeks.
“The Brent-WTI spread will continue to narrow,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “It’s clearly turned the corner.”
--Editors: Margot Habiby, David Marino