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Brent crude holds steady above $113 on positive US data

US business spending rise boosts oil; investors await Fed meeting
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First Published: Tue, Jan 29 2013. 11 54 AM IST
Brent crude edged up 14 cents to $113.62 a barrel by 11.30am, while U.S. crude rose 34 cents to $96.78. Photo: AFP
Brent crude edged up 14 cents to $113.62 a barrel by 11.30am, while U.S. crude rose 34 cents to $96.78. Photo: AFP
Updated: Tue, Jan 29 2013. 12 01 PM IST
Singapore: Brent crude held steady above $113 on Tuesday on hopes that economic growth might be picking up in the world’s largest oil consumer after a gauge of planned US business spending rose in December, adding to recent positive global economic data.
But traders remained cautious ahead of a US monetary policy meeting and economic reports out of the United States and China this week.
Brent crude edged up 14 cents to $113.62 a barrel by 11.30am, while US crude rose 34 cents to $96.78.
Markets were waiting for trading cues from the federal open market committee meeting on Wednesday and payroll data due on Friday, said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo.
“I don’t think there’s much downside risk,” he said. “I think economic data out of the US has improved, so I don’t think there are any negative factors in the market.”
Risk appetite has been improving after a raft of positive global economic data.
The commerce department said on Monday that orders for non-defence capital goods excluding aircraft, a closely watched proxy for investment plans, edged up 0.2% last month.
Many economists expected businesses to invest more timidly late last year because of uncertainty over government spending cuts and tax increases that had been due to kick in this month. Congress ultimately struck a last-minute deal to avoid or delay most of the austerity measures.
Despite the uncertainty, Monday’s data pointed to growing economic momentum as companies sensed improved consumer demand.
The Federal Reserve, whose policy-setting panel concludes a two-day meeting on Wednesday, has said it expects to keep short-term interest rates exceptionally low to help support the economy.
US nonfarm payroll figures due on Friday are likely to show the jobless rate unchanged in January and that the US economy created 155,000 jobs, economists polled by Reuters say.
Middle-East tension
Persisting tension in the Middle East and Africa also supported oil. Iran said on Monday it had launched a live monkey into space, seeking to show off missile systems that have alarmed the West because the technology could potentially be used to deliver a nuclear warhead.
Suspected Islamist militants attacked an oil pipeline in northern Algeria, killing two guards and wounding seven other people, a security source told Reuters.
In Egypt, thousands of protesters ignored a curfew to take to the streets in cities along the Suez canal, defying a state of emergency imposed by Islamist President Mohamed Morsi to end days of violence that has killed at least 51 people.
Overall, the world oil market should remain well supplied in 2013 and Opec does not need to trim back its oil output, secretary general Abdullah al-Badri said.
Gasoline prices higher
Gasoline hit a near three-month high following news that an oil refinery in the US north-east region will close, which could boost oil demand.
The loss of the plant, the latest in the region to fall victim to poor profits, tightened the supply outlook for the north-east, which is likely to have to rely more on imports and supplies from the Gulf Coast, according to analysts.
“As US refiners typically build up stocks over spring to meet peak summer demand, the closure of this refinery is supporting ideas that the supply of gasoline in the summer could tighten,” ANZ analysts said in a note on Tuesday.
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First Published: Tue, Jan 29 2013. 11 54 AM IST
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