Oil rose and gasoline climbed to a 10-month high on speculation that fuel demand will increase with the economic rebound in the U.S., the world’s biggest crude- consuming country. Futures in New York advanced 1.9 percent after U.S. industrial output increased for a 10th month as January’s production was revised to a gain. Consumer prices excluding food and energy climbed a smaller-than-forecast 0.1 percent last month, giving the Federal Reserve less reason to boost borrowing costs anytime soon to curb inflation.
Crude for April delivery rose $1.95 to $107.06 a barrel on the New York Mercantile Exchange, the highest settlement since March 9. It was the biggest gain since Feb. 21. Prices, which are up 8.3 percent this year, fell 0.3 percent this week.
Gasoline for April delivery extended its 2012 gain to 25 percent, surging 6.84 cents, or 2.1 percent, to $3.3569 a gallon. The settlement was the highest since May 10.
Brent oil for May settlement increased $3.21, or 2.6 percent, to end the session at $125.81 a barrel on the London- based ICE Futures Europe exchange.
Industrial Output
Industrial output at factories, mines and utilities in the U.S. rose 0.02 percent in February, below the 0.4 percent increase that was the median estimate of 80 economists surveyed by Bloomberg News before a report today. January’s output was revised to an increase of 0.4 percent from little changed.U.S. applications for unemployment insurance payments fell by 14,000 to 351,000 last week, Labor Department data showed yesterday. The Federal Reserve Bank of New York’s general economic index increased to 20.2 this month, the highest since June 2010.
The so-called core measure of consumer prices climbed 0.1 percent in February, less than the 0.2 percent projected by 79 analysts surveyed by Bloomberg News, the Labor Department reported in Washington. The consumer-price index climbed 0.4 percent, matching the median forecast in the survey.
“The consumer prices were a relief,” said Phil Flynn, an analyst at PFGBest in Chicago. “There were fears that the core rate would be higher, forcing the Fed to raise rates earlier than planned to stop inflation.”
Consumer Confidence
Oil also gained as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 74.3 from a one-year high of 75.3 and the euro rose as much as 0.8 percent against the dollar after the inflation report. A stronger euro and weaker dollar boost oil’s investment appeal.“The consumer confidence number was a bit lower than expected but it was still positive, and the industrial output number wasn’t bad either,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “It looks like the primary reason for the move higher today is the weakness of the dollar.”
Oil fell yesterday on reports that the U.S. and the U.K. agreed to cooperate on releases from strategic reserves to reduce gasoline prices. U.K. Prime Minister David Cameron and Jay Carney, the White House press secretary, said no agreement was reached.
The U.S. has withdrawn oil from its Strategic Petroleum Reserve 18 times since 1985, most recently in July and August last year in an International Energy Agency effort to offset a supply disruption in Libya.
Gasoline Prices
“An SPR release is certainly on the minds of people in the administration, especially given the election,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “High gasoline prices are becoming a concern and could act as a drag on the economy.”The national average retail price of unleaded regular gasoline in the U.S. climbed to a nine-month high of $3.831 a gallon yesterday, according to a daily survey by AAA, the country’s largest motoring organization.
Gasoline consumption rose 0.9 percent from a year earlier to 8.72 million barrels a day in February, a monthly report from the American Petroleum Institute showed today. It was the first year-on-year demand gain since February 2011, the industry- funded API said.
Sanctions against Iran, which have helped lift oil prices this year, were strengthened yesterday. The Society for Worldwide Interbank Financial Telecommunication, known as Swift, said it will stop providing services to Iranian banks subject to EU sanctions. The Persian Gulf country is being targeted to discourage its nuclear program.
