WTI Crude Trades Near One-Week High on U.S. Fuel Demand Outlook

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West Texas Intermediate crude traded near the highest price in a week as stronger-than-forecast economic data bolstered the outlook for fuel demand in the U.S., the world’s biggest oil user.

Futures were little changed in New York after rising 0.5 percent yesterday as U.S. unemployment benefit claims slid more than economists estimated. WTI is poised for a fourth weekly gain, the longest rally in seven months, as cold weather boosts consumption of distillate fuels. London-traded Brent crude climbed as Libya’s oil output fell after protesters tampered with a pipeline.

“The positioning for the U.S. economy and what the market is perceiving is providing support for oil,” saidJonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney who predicts investors may sell WTI contracts at about $98.80 a barrel. “The draw in the products is typical for this time of the year where we see inventories start to decline. That should provide some underlying support to the market.”

WTI for March delivery was at $97.66 a barrel in electronic trading on the New York Mercantile Exchange, down 18 cents, at 12:30 p.m. Singapore time. The contract advanced 46 cents to $97.84 yesterday, the highest settlement since Jan. 30. The volume of all futures traded was about 20 percent below the 100-day average. Prices are up 0.1 percent this week.

Brent for March settlement increased as much as 28 cents to $107.47 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $9.70 to WTI, compared with $9.59 yesterday.

Employment

U.S. jobless claims fell by 20,000 to 331,000 in the week ended Feb. 1, the Labor Department reported yesterday in Washington. A decline to 335,000 was projected in a Bloomberg News survey of economists.

Nonfarm payrolls probably rose by 180,000 workers in January after a 74,000 gain the previous month, according to a separate Bloomberg survey before U.S. data today.

In Libya, production ranged from 450,000 to 500,000 barrels a day, down from 600,000 barrels last week, according to Nuri Berruien, the chairman of National Oil Corp. Protesters demanding money “tampered” with a valve on a pipeline in the northwestern Zintan region, causing output to drop at the Sharara field further south, he said yesterday. Libya, a member of the Organization of Petroleum Exporting Countries, holds Africa’s largest crude reserves.

Cold Weather

Weather forecasters are gauging the possibility of a winter storm arriving this weekend in the Northeast, which is still clearing snow from two systems earlier this week. Distillate inventories, including heating oil and diesel, shrank for a fourth week in the seven days through Jan. 31, data from the Energy Information Administration show.

WTI will probably decline next week as U.S. refineries shut plants for maintenance, reducing crude demand and bolstering stockpiles, a Bloomberg survey shows. Nineteen of 37 analysts, or 51 percent, forecast futures will decrease through Feb. 14. Ten respondents estimated prices will climb, and eight said there will be little change.

Refineries operated at 86.1 percent of capacity in the week ended Jan. 31, according to the EIA, the Energy Department’s statistical arm. That’s the lowest rate since October. Units are often idled at the start of the year after the heating season in November and December.