Oil Rises to a Four-Week High as Consumer Confidence Improves
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By Mark Shenk
May 1 (Bloomberg) -- Crude oil rose to a four-week high as U.S. consumer confidence improved and manufacturing shrank at the slowest pace in seven months, signaling that the recession will end later this year.
Oil gained as much as 5 percent after a report showed that confidence in April climbed to its highest level since before the collapse of credit late last year. Factory orders and production are steadying after plunging last year as companies cut stockpiles. Prices were down earlier as U.S. supplies rose to the highest since 1990 and fuel demand dropped.
“Traders are looking at poor statistics and looking at them as bullish because they are better than a month ago,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “These moves are unsustainable because the fundamentals of the market are poor.”
Crude oil for June delivery rose $2.20, or 4.3 percent, to $52.32 a barrel at 11:18 a.m. on the New York Mercantile Exchange. Future touched $53.65, the highest since April 3. Prices are up 1.3 percent this week and 17 percent this year.
The Reuters/University of Michigan final index of consumer sentiment rose to 65.1, the second straight gain, from 57.3 in March. The index reached a three-decade low of 55.3 in November. The Institute for Supply Management’s factory index rose to 40.1 last month, higher than forecast, from 36.3 in March. Readings less than 50 signal a contraction.
Chinese Manufacturing
China’s manufacturing expanded for a second month as stimulus spending stoked a recovery in the world’s third-biggest economy. The Purchasing Manager’s Index rose to a seasonally adjusted 53.5 in April from 52.4 in March, the Federation of Logistics and Purchasing said today in Beijing in an e-mailed statement. A reading above 50 indicates an expansion.
“The demand and inventory numbers are poor but they are backward-looking,” said Nauman Barakat, senior vice president of energy at Macquarie Futures USA Inc. in New York. “The forward-looking economic news is more bullish. The Chinese manufacturing numbers are strong and OPEC continues to cut.”
The Organization of Petroleum Exporting Countries agreed at three meetings last year that the 11 members with quotas would cut output by 4.2 million barrels a day to 24.845 million. OPEC will meet in Vienna on May 28 to review production targets.
“We have an inventory overhang which is quite impressive and an incredible build of oil at sea,” said Harry Tchilinguirian, senior oil market analyst at BNP Paribas SA in London. “We may have a correction from here.”
U.S. Stockpiles
Crude-oil supplies rose 4.05 million barrels to 374.7 million barrels last week, according to an Energy Department report earlier this week. The gain left inventories at the highest level since September 1990 and 15 percent above the five-year average for the period.
Since at least November, oil companies such as Royal Dutch Shell Plc and BP Plc have sought to profit from storing oil on tankers, benefiting from so-called contango, where crude for longer-dated contracts is more expensive than near-term supply.
Traders are storing 100 million barrels of oil at sea, enough to supply Europe for five days, Frontline Ltd., the world’s largest supertanker operator, said April 23.
Brent crude oil for June settlement rose $1.82, or 3.6 percent, to $52.62 on London’s ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at [email protected]
Last Updated: May 1, 2009 11:35 EDT
Share | Email | Print | A A A
By Mark Shenk
May 1 (Bloomberg) -- Crude oil rose to a four-week high as U.S. consumer confidence improved and manufacturing shrank at the slowest pace in seven months, signaling that the recession will end later this year.
Oil gained as much as 5 percent after a report showed that confidence in April climbed to its highest level since before the collapse of credit late last year. Factory orders and production are steadying after plunging last year as companies cut stockpiles. Prices were down earlier as U.S. supplies rose to the highest since 1990 and fuel demand dropped.
“Traders are looking at poor statistics and looking at them as bullish because they are better than a month ago,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “These moves are unsustainable because the fundamentals of the market are poor.”
Crude oil for June delivery rose $2.20, or 4.3 percent, to $52.32 a barrel at 11:18 a.m. on the New York Mercantile Exchange. Future touched $53.65, the highest since April 3. Prices are up 1.3 percent this week and 17 percent this year.
The Reuters/University of Michigan final index of consumer sentiment rose to 65.1, the second straight gain, from 57.3 in March. The index reached a three-decade low of 55.3 in November. The Institute for Supply Management’s factory index rose to 40.1 last month, higher than forecast, from 36.3 in March. Readings less than 50 signal a contraction.
Chinese Manufacturing
China’s manufacturing expanded for a second month as stimulus spending stoked a recovery in the world’s third-biggest economy. The Purchasing Manager’s Index rose to a seasonally adjusted 53.5 in April from 52.4 in March, the Federation of Logistics and Purchasing said today in Beijing in an e-mailed statement. A reading above 50 indicates an expansion.
“The demand and inventory numbers are poor but they are backward-looking,” said Nauman Barakat, senior vice president of energy at Macquarie Futures USA Inc. in New York. “The forward-looking economic news is more bullish. The Chinese manufacturing numbers are strong and OPEC continues to cut.”
The Organization of Petroleum Exporting Countries agreed at three meetings last year that the 11 members with quotas would cut output by 4.2 million barrels a day to 24.845 million. OPEC will meet in Vienna on May 28 to review production targets.
“We have an inventory overhang which is quite impressive and an incredible build of oil at sea,” said Harry Tchilinguirian, senior oil market analyst at BNP Paribas SA in London. “We may have a correction from here.”
U.S. Stockpiles
Crude-oil supplies rose 4.05 million barrels to 374.7 million barrels last week, according to an Energy Department report earlier this week. The gain left inventories at the highest level since September 1990 and 15 percent above the five-year average for the period.
Since at least November, oil companies such as Royal Dutch Shell Plc and BP Plc have sought to profit from storing oil on tankers, benefiting from so-called contango, where crude for longer-dated contracts is more expensive than near-term supply.
Traders are storing 100 million barrels of oil at sea, enough to supply Europe for five days, Frontline Ltd., the world’s largest supertanker operator, said April 23.
Brent crude oil for June settlement rose $1.82, or 3.6 percent, to $52.62 on London’s ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at [email protected]
Last Updated: May 1, 2009 11:35 EDT
