Oil above $73 on economic data, colder US weather

Oil above $73 on economic data, colder US weather

Singapore: Oil rose above $73 a barrel on Friday, underpinned by signs of a gradual economic recovery in the United States and the prospect of increased winter demand as a cold snap gripped the US Northeast.

A slight fall in the US dollar from a more than three-month high the previous day added to price support, after a slew of economic data on Thursday that seemed to show the United States on track for a recovery, albeit a patchy one.

Crude for January delivery rose 46 cents to $73.11 a barrel by 8:00am, after settling down 1 cent on Thursday.

London Brent crude was up 18 cents at $73.55.

“We’ve seen some short-covering due to expectations of colder weather in the United States," said Sumisho Sano, general manager of research at Tokyo-based SCM Securities.

“We think oil will stay in the range of $65-$75 for the rest of the year. It will be choppy though, with the market continuing to focus on dollar movements, inventories, and economic data," he added.

On the supply front, Suncor Energy Inc said Thursday it would cut output at one of its oil sands upgraders in Canada’s Alberta Province by up to 150,000 barrels a day, or half of its capacity, for two to four weeks after a fire at the plant on Tuesday.

The outage had a limited effect on world oil prices, but traders said it could mean some of the crude stocks accumulating in the US Midwest, and weighing on front-month futures, will be drawn down.

The January oil contract, which expires on Monday, is on track for a 4.6% gain this week, but the second month is up just 3.1%, as the backwardation between the two narrowed to around $1 from more than $2 at the start of the week.

There is no expectation of a change in output from the Organization of the Petroleum Exporting Countries (Oppec), which pumps about a third of the world’s oil, when it meets in Angola on 22 December.

Factory activity in the US mid-Atlantic region hit a 4-1/2-year high in December and a gauge of future economic conditions rose last month, adding to evidence of a pick-up in the world’s largest economy.

However, the number of people filing new applications for unemployment benefits last week rose unexpectedly, a sign that the labour market was rebounding only gradually.