Oil trades near 4 months high;OPEC sees no price collapse

by on January 29, 2013 5:51 am GMT

Oil traded near the highest level in four months in New York on signs of economic growth in the U.S. and after OPEC Secretary General Abdalla El-Badri said prices are unlikely to drop this year.

Futures were little changed after climbing 0.6 percent yesterday. U.S. durable goods orders last month rose by more than the highest forecast in a Bloomberg survey, Commerce Department data showed. Federal Reserve policy makers start a two-day meeting today to discuss continuing asset purchases to boost the economy. The oil market is well-balanced and the Organization of Petroleum Exporting Countries doesn’t “envision a price collapse” in 2013, El-Badri said in London.

“You are looking at a trend over the last few months, with durable goods orders being consistent with a lot of the other figures, that is pointing toward a decent, moderate growth level in the U.S.,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The OPEC statement seems to imply that they are not contemplating any particular action.”

Crude for March delivery was at $96.72 a barrel, up 28 cents, in electronic trading on the New York Mercantile Exchange at 1:22 p.m. Singapore time. The average volume of all contracts traded was 50 percent below the 100-day average. Futures rose to $96.44 yesterday, the highest since Sept. 17.

Brent for March settlement rose 10 cents to $113.58 a barrel on the London-based ICE Futures Europe exchange. The average volume of all contracts traded was 40 percent below the 100-day average. The European benchmark grade was at a premium of $16.86 to West Texas Intermediate futures, from $17.04 yesterday.

Fuel Supplies

There is no need for OPEC to cut oil supply if economies are struggling, El-Badri said during a conference at Chatham House in London yesterday. Resource availability to meet growing demand “is not an issue,” he said. OPEC meets next on May 31.

OPEC, which supplies about 40 percent of the world’s oil, reduced output by 465,000 barrels a day in December to 30.4 million a day, the lowest level since October 2011, led by a reduction in Saudi Arabia, the group said in a Jan. 16 report.

U.S. crude stockpiles probably climbed 2.7 million barrels last week, according to the median estimate of seven analysts in a Bloomberg News survey before an Energy Department report tomorrow. The industry-funded American Petroleum Institute will release separate inventory data today.

Gasoline supplies probably increased 1 million barrels last week and distillate stockpiles, a category that includes heating oil and diesel, dropped 1 million barrels, according to the Bloomberg survey.

Durable Goods

Bookings for goods meant to last at least three years advanced 4.6 percent in December from the prior month, the Commerce Department report showed yesterday in Washington. The median forecast of 76 economists surveyed by Bloomberg called for a 2 percent gain in orders. Estimates ranged from a drop of 1.4 percent to a 4.5 percent increase.

The Fed is purchasing as much as $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The Federal Open Market Committee last month decided to add $45 billion in monthly purchases of Treasury notes to its program buying $40 billion of mortgage- backed securities each month. The FOMC set no limit on the size or duration of the bond purchases.

Oil’s rally in New York may stall as a technical indicator shows futures have advanced too quickly for further gains to be sustainable. The 14-day relative strength index is higher than 70 today for the first time in a week, according to data compiled by Bloomberg. Investors typically sell contracts above that reading, when a market is considered overbought and will probably decline.