US oil hits 14-month top on stocks draw
Singapore, July 3, 2013
US oil surged past the $100-per-barrel mark to hit a 14-month high on Wednesday as traders bet on a large decline in crude inventories in top consumer the United States, while tensions in the Middle East also cushioned prices.
Fears that a turmoil in Egypt could destabilise the Middle East and disrupt oil supplies buoyed Brent crude as well, pushing it up to a more than one-week peak of $105.61 a barrel.
"Middle East tensions are always going to put a cushion under the price while there is some tight supply going on in the US," Ben Le Brun, a markets analyst at OptionsXpress in Sydney said. "It's double positive news for crude."
US oil was up $2.22 at $101.82 per barrel by 0338 GMT, after rising to as high as $102.18 earlier in the session. Brent rose $1.20 to $105.20.
Both benchmarks gained for a third straight session, supported by geopolitical tensions. Libyan oil output has fallen by a third after protesters shut several oilfields and anti-government demonstrations in Egypt have raised concerns about the stability of the whole region.
Traders are now priming for better US jobs data due on Friday, said Yusuke Seta, a commodity sales manager at Newedge Japan. Technical charts point to higher oil prices after US crude futures rose more than expected, breaking several resistance levels, he said.
"Investors are taking more risks and are getting ready for Friday's non-farm payroll," he said, adding that traders snapped up oil as the US markets will be closed on Thursday for a holiday.
Brent's premium to West Texas Intermediate crude hit a low of $3.14, a level last seen in January 2011. The spread may narrow further on a drop in US inventories.
US crude inventories fell by 9.4 million barrels in the week through June 28, the American Petroleum Institute said late on Tuesday. Analysts had been expecting a drawdown of 2.3 million barrels in a Reuters poll.
Investors will be looking to verify this data with statistics from the US Department of Energy's Energy Information Administration (EIA) due later on Wednesday.
Reuters market analyst Wang Tao said a bullish target at $102.82 per barrel has been established for US crude, as it has climbed above a resistance at $100.09. - Reuters