Dec 31.. from the gods at Bloom-bergOil Rises a Seventh Day, Set for Biggest Annual Gain in Decade
By James Paton and Yee Kai Pin
Dec. 31 (Bloomberg) -- Crude oil rose for a seventh day ascolder weather in the U.S. increased demand for heating fuels.Prices are poised for the biggest annual gain since 1999 onoptimism consumption will rebound as the global economy recovers.
Oil settled at a six-week high yesterday on concern unrestin Iran may disrupt supplies from the second-largest producer inthe Organization of Petroleum Exporting Countries. Signs the U.S.economy is rebounding from the worst recession since World WarII also boosted prices.
“Oil prices should keep on pushing higher,” Justin Smirk,a senior economist at Westpac Banking Corp. in Sydney, said bymobile phone today. “The market will be volatile, with periodsof disappointment, but at the end of next year we should see oilprices higher than what they are now.”
Crude oil for February delivery rose as much as 57 cents,or 0.7 percent, to $79.85 a barrel in electronic trading on theNew York Mercantile Exchange. The contract was at $79.68 at 3:20p.m. Singapore time. Futures, in the longest winning streaksince October, are set for a 79 percent advance this year,having tripled over the past decade.
Prices dropped to as low as $32.70 a barrel Jan. 20 as therecession reduced demand and reached $82 on Oct. 21, partlybecause a decline in the dollar bolstered the investment appealof commodities, including gold. Last year, oil touched a record$147.27 a barrel.
Crude may rise 37 percent in 2010 to an average $85 abarrel, from about $62 this year, commodities research analystsat Barclays Capital, led by Paul Horsnell, said in a reportyesterday.
Cold Weather
Weather in the U.S. south and east regions will be“predominantly cold” in the next 11 days to 15 days, MDAFederal Inc.’s EarthSat Energy Weather of Rockville, Maryland,said yesterday.
Heating oil futures in New York have risen 5 percent thismonth on forecasts for colder temperatures. The contract forJanuary delivery, which expires today, traded at $2.12 a gallon,up 1.07 cents, or 0.5 percent, at 9:37 a.m. in Singapore.
“Commodities are still going to be the place to be,” saidGavin Wendt, an analyst at Mine Life Resources in Sydney. “Theanticipation of a pick-up in U.S. oil demand is going to be abig factor that will come into play in 2010. On top of that, youhave uncertainty with respect to Iran in particular.”
Iran has detained about 1,000 people since protests eruptedDec. 27 in Tehran and other cities, according to the New York-based International Campaign for Human Rights in Iran. Thedisputed June re-election of President Mahmoud Ahmadinejad hassparked the country’s worst unrest since the overthrow of theShah in the 1979 Islamic Revolution.
Iran Unrest
Iran has accused Western countries of inciting the latestdemonstrations. Yesterday, crowds of government supportersmassed in Tehran, some calling for the death of oppositionleaders, as police warned they will crush any further anti-regime protests.
OPEC will cut oil shipments for the first time in twomonths in the four weeks ending Jan. 9, to 22.89 million barrelsa day, according to Oil Movements, a Halifax, England-basedconsultant. The 12-member group pumps about 40 percent of theworld’s oil.
U.S. crude oil inventories fell a fourth week to the lowestsince January, Energy Department data showed yesterday.Commercially held stockpiles dropped 1.54 million barrels to 326million in the week to Dec. 25. Distillate fuel and gasolinesupplies also declined.
Companies in the U.S. expanded more than expected inDecember as orders and employment grew, the Institute for SupplyManagement-Chicago Inc. said yesterday. The group’s businessbarometer rose to 60, the highest level since January 2006, from56.1 in November. Readings above 50 signal expansion.
Price Survey
Oil may rise next week on cold weather and concern over theunrest in Iran, based on a Bloomberg News survey.
Twelve of 27 analysts and traders, or 44 percent, saidfutures will climb through Jan. 8. Eight respondents, or 30percent, forecast the market will drop and seven said priceswill be little changed. Last week, 48 percent of surveyrespondents predicted oil would gain.
Brent crude oil for February settlement climbed as much as71 cents, or 0.9 percent, to $78.74 a barrel on the London-basedICE Futures Europe exchange. It was at $78.58 at 3:19 p.m.Singapore time.
To contact the reporters on this story:Yee Kai Pin in Singapore atkyee13@bloomberg.net;James Paton in Sydney jpaton4@bloomberg.net
Last Updated: December 31, 2009 02:22 EST