WTI Trades Near Three-Day High on Economy Signals; Brent Rises

Jun 09, 2014 9:00 am ET

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June 9 (Bloomberg) -- West Texas Intermediate crude traded near the highest intraday price in three days amid signs that economic growth is being sustained in the U.S. and China, the world’s two biggest oil consumers. Brent also rose in London.

Futures climbed as much as 0.9 percent in New York. A Labor Department report showed U.S. employment exceeded the pre- recession peak for the first time, while China’s exports climbed in May. Russia and Ukraine plan another round of natural gas talks today, while OPEC ministers say they will probably leave their oil-production target unchanged this week.

“The good jobs data from the U.S. at the end of last week are supporting prices,” Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, said by e-mail. “The key words this week will be Libya, Ukraine and OPEC.”

WTI for July delivery was at $103.52 a barrel in electronic trading on the New York Mercantile Exchange, up 86 cents, at 1:51 p.m. London time. The contract gained 18 cents to $102.66 on June 6. The volume of all futures traded was 7 percent below the 100-day average for the time of day. Prices have advanced 5.1 percent this year.

Brent for July settlement was 88 cents higher at $109.49 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $5.98 to WTI on ICE. The spread closed at $5.95 last week.

U.S. Payrolls

U.S. payrolls expanded by 217,000 in May, extending a 282,000 rise in April, the Labor Department said on June 6. That marked the fourth monthly increase in employment of more than 200,000 for the first time since early 2000. The jobless rate remained at 6.3 percent, the lowest in almost six years.

China’s exports increased by 7 percent in May according to the General Administration of Customs, more than the median 6.7 percent gain forecast in a Bloomberg News survey of economists, helping to cushion the world’s second-biggest economy from a deeper slowdown as an unexpected drop in imports highlighted risks to growth.

“The higher open today likely follows from positive Chinese trade data,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said. “The country’s trade surplus widened as exports expanded, setting a positive macro-economic tone.”

The Asian nation will account for about 11 percent of global oil consumption this year, compared with 21 percent for the U.S., according to estimates from the International Energy Agency in Paris.

Ukraine Talks

Bilateral talks between OAO Gazprom and NAK Naftogaz Ukrainy over Ukraine’s gas debts are planned for today in Brussels, before a tripartite meeting with European Union officials, Ukrainian Energy Minister Yuri Prodan said by phone. Agreement has yet to be reached on the gas price or Ukraine’s debt for past supplies, he said.

OPEC will probably maintain its production target at 30 million barrels a day at a meeting in Vienna on June 11. Ministers from Saudi Arabia, Angola and Kuwait said they expect no change, as did 22 of 23 analysts and traders in a separate Bloomberg survey. The 12-member group pumps about 40 percent of the world’s oil.

In Libya, output has fallen to about 10 percent of capacity because of protests at oil fields and strikes at export terminals.

Hedge funds and other money managers reduced net-long positions in WTI by 1.5 percent in the week ended June 3, the U.S. Commodity Futures Trading Commission said. Bullish bets on Brent crude fell by 7.7 percent in the same period, the first decrease in four weeks, according to data from ICE exchange.