Jan. 10 (Bloomberg) -- West Texas Intermediate rose from its lowest closing price since May as record-high Chinese crude imports and signs of a U.S. economic recovery fanned speculation that oil’s drop was excessive.
Futures gained as much as 1.2 percent in New York, trimming a second weekly decline, as a technical indicator signaled the loss of 8.6 percent in eight sessions through yesterday can’t be sustained. U.S. employers added more jobs in 2013 than at any point in the past eight years, according to a Bloomberg News survey before a Labor Department report today. China imported about 26.8 million metric tons of crude last month, capping a 4 percent annual climb, customs data show.
“It’s been a significant change in price in a short space of time, so there could be a bounce in the cards for WTI,” said Ole Sloth Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “But if there is a major recovery, there will be sellers ready to sell into it. The market is almost relying on China, otherwise prices would be exposed to an even deeper correction.”
WTI for February delivery climbed as much as $1.07 to $92.73 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.50 at 9:13 a.m. London time. The volume of all futures traded was about 21 percent more than the 100-day average. Prices are down 1.6 percent this week. Yesterday the contract fell 67 cents to $91.66, the lowest close since May 1.
Brent for February settlement increased as much as 81 cents, or 0.8 percent, to $107.20 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $14.45 to WTI, compared with $14.16 yesterday.
WTI’s 14-day relative strength index slid to 30.2 yesterday, the lowest level since Nov. 5, according to data compiled by Bloomberg. Investors typically buy contracts when the indicator is below 30, signaling a market is oversold. Today’s reading is about 35.
“An element of the bounce in West Texas could be technical,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by telephone today. “We do have what looks like an oversold situation in WTI. The key figure is nonfarm payrolls,” he said, referring to the Labor Department report due at 1:30 p.m. London time.
U.S. nonfarm payrolls probably rose by 197,000 last month, the Bloomberg survey of economists shows. That would bring the total for the year to 2.27 million, the most since 2005. Claims for jobless benefits declined last week to the lowest level in a month, the Labor Department said yesterday.
Oil will probably gain next week, a separate Bloomberg survey shows. Seventeen of 37 analysts and traders, or 46 percent, forecast WTI will advance, while eight predicted a drop. Last week, 59 percent said prices would decrease.
China’s crude imports in December were up 13 percent from a year earlier, the General Administration of Customs said in Beijing today. The country is the world’s biggest oil consumer after the U.S. and the first to sell more than 20 million vehicles domestically in a year.