West Texas Intermediate crude rose for the first time in three days as signs of an improving U.S. economy and record new credit in China bolstered the demand outlook for the world’s two biggest oil consumers.
Futures climbed as much as 0.8 percent in New York, extending a fifth weekly gain. China’s aggregate financing, the broadest measure of credit, reached 2.58 trillion yuan ($425 billion) in January, the People’s Bank of China said in a statement on Feb. 15, signaling momentum to sustain growth. The Thomson Reuters/University of Michigan preliminary index of consumer confidence held at 81.2 this month, topping the median estimate of 80.2 in a Bloomberg News survey of economists.
“More bank lending in China is good news,” Tom James, the Dubai-based managing director for Navitas Resources Ltd., said by phone today. “Signs of improvement in the U.S. are psychologically helping the market and new credit in China is what people are really latching onto as supporting demand.”
WTI for March delivery increased as much as 83 cents to $101.13 a barrel in electronic trading on the New York Mercantile Exchange, and was at $100.79 at 1:43 p.m. London time. The contract slid 5 cents to $100.30 on Feb. 14. The volume of all futures traded was about 26 percent below the 100-day average. Prices have advanced 2.4 percent this year.
Floor trading will be closed today for the U.S. Presidents Day holiday. Electronic transactions will be booked tomorrow.
Brent for April settlement slipped 3 cents to $109.05 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $8.56 to WTI on ICE, compared with $8.95 on Feb. 14.
With U.S. trading set to be sluggish today, prices will probably remain little changed this week, James said. News on supply disruptions, for example in Iraq, Libya or Yemen, or U.S. demand have potential to affect the market, he said.
“Right now the upside is a bit limited,” while it may be a good time to buy if the price falls, James said.
WTI rose 0.4 percent last week to cap the longest rally in a year as cold weather boosted demand for energy. A snow storm that moved from the U.S. South to the Northeast knocked out power to hundreds of thousands of homes and businesses, snarling traffic and canceling more than 14,000 flights.
About 25 percent of households in the Northeast use heating oil to warm their homes, according to the Energy Information Administration, the Energy Department’s statistical arm.
Hedge funds were the most bullish on WTI in more than five months, according to the Commodity Futures Trading Commission. Money managers increased net-long positions, or wagers on rising prices, by 11 percent in the week ended Feb. 11. So-called short bets dropped the most since March 2011 as the opening of the southern part of TransCanada Corp.’s Keystone XL pipeline last month reduced supplies at Cushing,Oklahoma, the delivery point for New York-traded crude futures.
Stockpiles at Cushing, also the largest U.S. oil-storage hub, fell by 2.67 million barrels to 37.6 million in the seven days through Feb. 7, EIA data show. That’s the lowest level since November.
Money managers’ net bullish bets on Brent crude rose by 30 percent in the week ended Feb. 11 to the most in six weeks, according to data from ICE Futures Europe in London.