(For Bloomberg fair value curves, see CFVL <GO>)
Jan. 10 (Bloomberg) -- West Texas Intermediate rose from its lowest closing price since May as record-high Chinese crude imports fanned speculation that oil’s drop was excessive.
Futures gained as much as 1.9 percent in New York, trimming a second weekly decline, as a technical indicator signaled the loss of 8.6 percent in eight sessions through yesterday can’t be sustained. China imported about 26.8 million metric tons of crude last month, capping a 4 percent annual climb, customs data show. U.S. payrolls increased in December at the slowest pace since January 2011, government data showed, indicating a pause in the recent strength of the labor market that may have reflected the effects of adverse weather.
“It’s been a significant change in price in a short space of time, so there could be a bounce in the cards for WTI,” said Ole Sloth Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “But if there is a major recovery, there will be sellers ready to sell into it. The market is almost relying on China, otherwise prices would be exposed to an even deeper correction.”
WTI for February delivery climbed as much as $1.72 to $93.38 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.14 at 1:54 p.m. London time. The volume of all futures traded was 38 percent above the 100-day average. Prices are down 0.9 percent this week. Yesterday the contract fell 67 cents to $91.66, the lowest close since May 1.
Brent for February settlement increased as much as 86 cents, or 0.8 percent, to $107.25 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $14.05 to WTI, compared with $14.16 yesterday.
WTI’s 14-day relative strength index slid to 30.2 yesterday, the lowest level since Nov. 5, according to data compiled by Bloomberg. Investors typically buy contracts when the indicator is below 30, signaling a market is oversold. Today’s reading is about 37.
“An element of the bounce in West Texas could be technical,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by telephone today. “We do have what looks like an oversold situation in WTI.”
The 74,000 gain in payrolls, less than the most pessimistic projection in a Bloomberg survey, followed a revised 241,000 advance the prior month, Labor Department figures showed today in Washington. The median forecast of 90 economists called for an increase of 197,000. The unemployment rate dropped to 6.7 percent, the lowest since October 2008, as more people left the labor force.
Oil will probably gain next week, a separate Bloomberg survey shows. Seventeen of 37 analysts and traders, or 46 percent, forecast WTI will advance, while eight predicted a drop. Last week, 59 percent said prices would decrease.
China’s crude imports in December were up 13 percent from a year earlier, the General Administration of Customs said in Beijing today. The country is the world’s biggest oil consumer after the U.S. and the first to sell more than 20 million vehicles domestically in a year.
--With assistance from Ben Sharples in Melbourne. Editors: Dan Weeks, John Deane