Oil price near 2-year high ahead of US jobs data
Oil was steady near 25-month highs on Friday following a slew of upbeat U.S. economic data that boded well for demand from the world’s top user, ahead of a jobs report expected to show employment expanded for a second straight month in November.
U.S. crude for January fell 2 cents to $87.98 a barrel at 0706 GMT, still headed for a second straight weekly gain, after ending at $88 on Thursday, the highest settlement since October 2008. Prices touched $88.63 on November 11, the highest intraday price in 25 months.
Jobs, home sales and retail sales data from the U.S. on Thursday pointed to a sustained economic recovery, while statistics earlier this week showed factory activity in China, the world’s second-largest oil user, reached a seven-month high.
China will switch to a prudent monetary policy from a moderately loose stance, the Communist Party’s top leaders decided on Friday, a change that could pave the way for more interest rate increases and lending controls, the state Xinhua news agency reported.
While talk of higher rates in China has kept a lid on oil price gains, analysts do not expect to see much of a dent in the country’s appetite for crude.
“While financial risks remain, we feel that the increasing synchronicity of global economic growth provides a resurgent force to physical commodity demand,” JP Morgan analysts headed by Lawrence Eagles said.
The European Central Bank resisted pressure on Thursday to commit to a major bond-buying program to contain the euro zone debt crisis, but traders said the ECB had been quietly buying bonds anyway, boosting the euro and raising the appeal of riskier assets, including commodities.
“Oil, like most global markets, has been buffeted by concerns surrounding the euro zone problems and their potential broader implications,” JP Morgan said.
GOOD-BYE CONTANGO
Rising oil demand from emerging and developed economies is also changing the price structure of crude futures markets. ICE Brent contracts for earliest delivery or settlement are now trading at a premium to later contracts for the first time since May 2008, according to Barclays Capital.
ICE Brent for January was unchanged at $90.69 by 0630 GMT, after touching $90.84 on Thursday, the highest price in 26 months. The February contract was down 2 cents at $90.63.
This pricing structure, known as backwardation, is replacing the prevalent so-called contango of the past two years, where earlier contracts traded at a discount to future ones. Contangos are reflective of oversupplied markets, while the turn to backwardation signals a tightening balance.
“The combination of the effect of falling prompt inventory at the front of the curve and a healthy degree of producers selling along the curve has helped to pivot the (Brent) curve back toward flat,” Barclays Capital analysts headed by Paul Horsnell said in a weekly report.
U.S. nonfarm payrolls likely increased last month by 140,000, according to a Reuters poll, amid strong gains in private hiring reported on Wednesday.
Fresh signs the U.S. economy has broken out of its summer soft patch emerged on Thursday as data showed a gauge of jobless benefits hit a new two-year low last week and pending home sales unexpectedly rose in October.
The opposite structure is contango.
“The cold is definitely affecting oil – see Brent is in backwardation, while U.S. crude is still in contango,” Thorbjrn Bak Jensen with Global Risk Management in Denmark said.
ICE gas oil futures, benchmark for European heating oil, were trading about 1 percent higher.
Source: Reuters
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WikiLeaks tweeted that the Amazon press release did not “accord with the facts on public record. It is one thing to be cowardly. Another to lie about it.”
Amazon: WikiLeaks broke rules
Amazon said it stopped hosting WikiLeaks’ website because it violated its terms of service, not because an inquiry by the U.S. Senate Homeland Security Committee sparked anger about the release of thousands of classified U.S. government documents.
Staff for the committee’s chairman, Joe Lieberman, had questioned Amazon about its relationship with WikiLeaks Tuesday and called on other companies that provide Web-hosting services to boycott WikiLeaks.
Story: U.S. senators call for WikiLeaks prosecution WikiLeaks turned to Amazon to keep its site available after hackers tried to flood it and prevent users accessing the classified information. WikiLeaks said it was now being hosted by servers in Europe.
In its statement Thursday, Amazon said its Amazon Web Services (AWS) rents computer infrastructure on a self-service basis. AWS does not pre-screen its customers, but it does have terms of service that must be followed.