Oil climbed above $95 a barrel for the first time in three months as U.S. building permits reached a four-year high and on concern that Israel will strike Iran and disrupt supplies from the Middle East.
Prices gained for a third day after the Commerce Department said the permits increased to an 812,000 annual pace in July, a signal of future economic strength.
Michael Oren, Israel’s U.S. ambassador, said yesterday that Israel would strike Iran to delay Iran’s ability to produce nuclear weapons for a few years.
“Evidence is accumulating that the housing market has bottomed out and is on the way up,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
“That would be such a huge gain for the U.S. economy and it’s going to be bullish for the oil market. The comment from Michael Oren about Israel striking Iran is pushing up oil.”
Oil for September delivery gained 92 cents, or 1 percent, to $95.25 a barrel at 11:58 a.m. on the New York Mercantile Exchange. The price reached $95.32, the highest intraday level since May 15.
Brent crude for September settlement, which expires today, slid 9 cents to $116.16 on the London-based ICE Futures Europe exchange.
The more actively traded October contract rose 23 cents to $114.54. Brent’s premium to New York oil fell to $20.91 from yesterday’s $21.92, the most since October.
Housing Permits
July’s housing permits, a proxy for future construction, were the most since August 2008 and beat the 769,000 pace forecast by economists surveyed by Bloomberg.
The Commerce Department data also showed housing starts fell 1.1 percent to a 746,000 annual rate from June’s 754,000 pace. Construction company leaders are turning less pessimistic.
The National Association of Home Builders/Wells Fargo index of builder confidence climbed in August to the highest level in more than five years, the Washington-based group said yesterday.
Oil has advanced more than 7 percent in August, helped by concern that Middle East tension will disrupt supplies from a region responsible for about one-third of the world’s oil production.
At a Bloomberg Government breakfast in Washington, Oren said time is short for a diplomatic solution to Iran’s nuclear program, which Israel sees as an existential threat. “Diplomacy hasn’t succeeded,” Oren said.
“We’ve come to a very critical juncture where important decisions do have to be made.”
Civil Defense
Israel has begun civil-defense measures, including a new system that uses text messages to alert the public to missile attacks, wider distribution of gas masks and the appointment of a new Home Front Defense minister.
“Those types of statements from the ambassador have the potential to impact oil prices significantly on any given day,” said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts.
The Middle East was responsible for 33 percent of global oil production last year and held 79 percent of proved reserves, according to BP Plc (BP/)’s Statistical Review of World Energy, released in June.
Crude has advanced 2.6 percent this week on declining inventories, rising demand and increasing equities.
Stockpiles dropped 3.7 million barrels last week and oil use reached a nine-month high, the Energy Department said yesterday.
The Standard & Poor’s 500 Index climbed to the highest intraday level since May 1. The S&P’s GSCI Index of 24 commodities also rose.
‘Positive Outlook’
“The fundamental data was bullish,” Barber said. “All of this stuff and the housing number together are creating a positive outlook for investors.”
Oil fell earlier as foreign direct investment in China declined and as the weekly Bloomberg Consumer Comfort Index fell to minus 44.4 in the period ended Aug. 12, the lowest level since January, from minus 41.9.
“The housing permits are bullish but the starts are not helping,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
“The global economy is still questionable. You look at China and you see that economic data is indicating substantial slowing there.”
bloomberg.com
Prices gained for a third day after the Commerce Department said the permits increased to an 812,000 annual pace in July, a signal of future economic strength.
Michael Oren, Israel’s U.S. ambassador, said yesterday that Israel would strike Iran to delay Iran’s ability to produce nuclear weapons for a few years.
“Evidence is accumulating that the housing market has bottomed out and is on the way up,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
“That would be such a huge gain for the U.S. economy and it’s going to be bullish for the oil market. The comment from Michael Oren about Israel striking Iran is pushing up oil.”
Oil for September delivery gained 92 cents, or 1 percent, to $95.25 a barrel at 11:58 a.m. on the New York Mercantile Exchange. The price reached $95.32, the highest intraday level since May 15.
Brent crude for September settlement, which expires today, slid 9 cents to $116.16 on the London-based ICE Futures Europe exchange.
The more actively traded October contract rose 23 cents to $114.54. Brent’s premium to New York oil fell to $20.91 from yesterday’s $21.92, the most since October.
Housing Permits
July’s housing permits, a proxy for future construction, were the most since August 2008 and beat the 769,000 pace forecast by economists surveyed by Bloomberg.
The Commerce Department data also showed housing starts fell 1.1 percent to a 746,000 annual rate from June’s 754,000 pace. Construction company leaders are turning less pessimistic.
The National Association of Home Builders/Wells Fargo index of builder confidence climbed in August to the highest level in more than five years, the Washington-based group said yesterday.
Oil has advanced more than 7 percent in August, helped by concern that Middle East tension will disrupt supplies from a region responsible for about one-third of the world’s oil production.
At a Bloomberg Government breakfast in Washington, Oren said time is short for a diplomatic solution to Iran’s nuclear program, which Israel sees as an existential threat. “Diplomacy hasn’t succeeded,” Oren said.
“We’ve come to a very critical juncture where important decisions do have to be made.”
Civil Defense
Israel has begun civil-defense measures, including a new system that uses text messages to alert the public to missile attacks, wider distribution of gas masks and the appointment of a new Home Front Defense minister.
“Those types of statements from the ambassador have the potential to impact oil prices significantly on any given day,” said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts.
The Middle East was responsible for 33 percent of global oil production last year and held 79 percent of proved reserves, according to BP Plc (BP/)’s Statistical Review of World Energy, released in June.
Crude has advanced 2.6 percent this week on declining inventories, rising demand and increasing equities.
Stockpiles dropped 3.7 million barrels last week and oil use reached a nine-month high, the Energy Department said yesterday.
The Standard & Poor’s 500 Index climbed to the highest intraday level since May 1. The S&P’s GSCI Index of 24 commodities also rose.
‘Positive Outlook’
“The fundamental data was bullish,” Barber said. “All of this stuff and the housing number together are creating a positive outlook for investors.”
Oil fell earlier as foreign direct investment in China declined and as the weekly Bloomberg Consumer Comfort Index fell to minus 44.4 in the period ended Aug. 12, the lowest level since January, from minus 41.9.
“The housing permits are bullish but the starts are not helping,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
“The global economy is still questionable. You look at China and you see that economic data is indicating substantial slowing there.”
bloomberg.com
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