3399

Brent rises towards $111 on US retail sales

US retail sales point to firmer consumer spending; US crude stocks rise less than forecast, says API
Comment E-mail Print Share
First Published: Wed, Jan 16 2013. 10 19 AM IST
Brent futures gained 39 cents to $110.69 a barrel by 09.15am. The February contract, which expires later in the day, settled $1.58 lower in the previous session, while the more heavily traded March Brent contract ended down $1.32. Photo: AFP
Brent futures gained 39 cents to $110.69 a barrel by 09.15am. The February contract, which expires later in the day, settled $1.58 lower in the previous session, while the more heavily traded March Brent contract ended down $1.32. Photo: AFP
Singapore: Brent crude rose towards $111 a barrel on Wednesday on hopes of a revival in demand growth in the world’s top oil consuming nation after US retail sales beat forecasts and oil inventories there rose far less than what was expected.
The solid 0.5% rise in December retail sales, compared with expectations of only a 0.2% increase, showed consumer resilience even in the face of automatic tax increases and government spending cuts. That added to evidence of a slow but steady recovery, and investors are now waiting for more data to gauge the global growth outlook.
Brent futures gained 39 cents to $110.69 a barrel by 09.15am. The February contract, which expires later in the day, settled $1.58 lower in the previous session, while the more heavily traded March Brent contract ended down $1.32.
US rose 30 cents to $93.58 a barrel.
Prices were also supported by data from the American Petroleum Institute that showed crude stockpiles rose by 46,000 barrels in the week to 11 January, compared with expectations for a 2.3 million barrel rise.
“US retail sales are important data, but not that substantial to trigger a rally in oil prices,” said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo. “The market is looking for more positive factors to push prices higher and till then prices will trade in a tight range.”
Emori expects Brent to trade between $109 and $111 a barrel and WTI between $92 and $94 until there is stronger evidence of an improvement in the global outlook.
One such number is China’s gross domestic product growth, due on Friday, which is expected to show the country’s annual economic growth quickened to 7.8% in the fourth quarter, according to a Reuters poll, snapping seven straight quarters of weaker expansion.
“I think China’s economy has bottomed out,” Emori said. “The downside risks to China have reduced and the economy is likely to show signs of improving.”
Other issues holding back oil prices include concerns over a lack of agreement on the US debt ceiling, he said.
Capping gains
Gains were capped by the World Bank’s latest global growth outlook that said a frustratingly slow economic recovery in developed nations is holding back the global economy.
The Bank cut its outlook for world growth in 2013, forecasting global gross domestic product inching up 2.4% this year, from 2.3% in 2012. In its last forecast in June, the bank projected global growth would reach 3% in 2013.
Brent is expected to test support at $109.64 per barrel, with a good chance of breaking this level and falling to $108.77, according to Reuters technical analyst Wang Tao.
US oil is expected to retrace to $92.24.
Comment E-mail Print Share
First Published: Wed, Jan 16 2013. 10 19 AM IST
More Topics: Brent | Crude | Oil | US retail sales | Inventory gain |
blog comments powered by Disqus
  • Wed, Apr 23 2014. 05 42 PM
  • Wed, Apr 16 2014. 06 11 PM
ALSO READ close

Brent holds near $110 on Ukraine, WTI up despite stock spike

Subscribe |  Contact Us  |  mint Code  |  Privacy policy  |  Terms of Use  |  Advertising  |  Mint Apps  |  About HT Media  |  Jobs
Contact Us
Copyright © 2014 HT Media All Rights Reserved