West Texas Intermediate and Brent crudes advanced Tuesday for the first time in three days after a report showed that confidence among U.S. consumers rose in October to a seven-year high as gasoline prices dropped.
The Conference Board’s index climbed to 94.5 this month, the highest since October 2007, from a September reading of 89 that was stronger than initially estimated, the New York-based private research group said Tuesday. WTI prices have slipped 11 percent this month on signs that global oil production is growing faster than demand for fuel.
“The consumer confidence numbers were very encouraging,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass. “It’s another sign that the U.S. economy is looking strong. A major reason for the rise in confidence was probably the drop in gasoline prices.”
WTI for December delivery rose 42 cents, or 0.5 percent, to settle at $81.42 a barrel on the New York Mercantile Exchange. Futures touched $79.44 Monday, the lowest intraday level since June 29, 2012. Prices have declined 17 percent this year.
Brent for December settlement gained 20 cents to close at $86.03 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $4.61 premium to WTI, compared with $4.83 Monday.
Separate data showed U.S. durable goods orders unexpectedly fell in September and a gauge of home prices showed slower growth. The Fed is on pace to end its monthly bond-buying and leave its key interest rate unchanged near zero, according to Bloomberg surveys of analysts.
A government report tomorrow will probably show that crude supplies rose 3.65 million barrels last week, according to the median of analyst responses in a Bloomberg survey.
“We’re waiting for tomorrow’s storage report,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “The consensus is for a gain of 3-to-4 million barrels, but we were looking for a 3 million-barrel gain last week and got 7 million. If something similar happens this week, WTI will come under pressure.”
U.S. gasoline inventories probably declined 900,000 barrels in the week ended Oct. 24, based on the median estimate of 11 analysts surveyed by Bloomberg before Wednesday’s report from the Energy Information Administration. Supplies of distillate fuel, a category that includes heating oil and diesel, are projected to have slid 1.4 million.
November gasoline futures rose 2.59 cents, or 1.2 percent, to settle at $2.1961 a gallon on the Nymex. Ultra low sulfur diesel for November delivery advanced 1.78 cents to close at $2.4931 a gallon.
Regular gasoline at U.S. pumps fell to the lowest level since December 2010. The average retail price dropped 0.3 cent to $3.034 a gallon Monday, according to AAA, the nation’s biggest motoring group. In Houston Tuesday, the average was $2.849 a gallon, down from $2.860 Monday.
“We’re going sideways,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “Trades want some new fundamental news before sending prices strongly in any direction. It could be the inventory reports, something about OPEC or economic fresh economic headlines.”
Barclays cut its estimate for the average Brent price in 2015 to $93 a barrel from $96, and for WTI to $85 from $89.
“OPEC supply-side adjustments are expected, but these are unlikely to be sufficient to overcome a lackluster demand picture in the first half of the year,” analysts Miswin Mahesh and Michael Cohen wrote in the report.
The Organization of the Petroleum Exporting Countries is unlikely to reduce its production target when it meets in Vienna on Nov. 27, Mohsen Qamsari, a director for international affairs at National Iranian Oil Co., said Monday according to the Oil Ministry’s news service.
OPEC, which supplies about 40 percent of the world’s crude, is increasing production even as demand growth falters. The group pumped 30.935 million barrels a day in September, the most since August 2013, according to a Bloomberg survey. The gain was led by Libya, where output climbed by 280,000 barrels a day to 780,000, the fifth straight increase.
Also Tuesday, natural gas futures climbed from an 11-month low in New York as meteorologists predicted cooler- than-average weather in the eastern U.S. that would spur demand for the heating fuel.
Natural gas for November delivery rose 8.8 cents, or 2.5 percent, to settle at $3.649 per million British thermal units on the New York Mercantile Exchange.
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