Crude oil is poised for its biggest monthly gain in five months after a report yesterday showed the U.S. economy grew in the third quarter, ending a year-long contraction and spurring optimism fuel demand will increase.
Oil rose 3.1 percent yesterday, the most in two weeks, after the Commerce Department said the world’s largest energy- consuming country expanded at a 3.5 percent annual pace between July to September. Gross domestic product was forecast to grow 3.2 percent, according to a Bloomberg News survey.
“It’s a very good number although it’s helped by stimulus from the government,” said Ken Hasegawa, a commodity derivatives sales manager at brokers Newedge in Tokyo. “We have to watch carefully the fourth quarter and the first quarter.”
Crude oil for December delivery traded at $79.99 a barrel, up 12 cents in electronic trading on the New York Mercantile Exchange at 12:30 p.m.
The dollar fell towards its fourth monthly drop against the euro. It traded at $1.4853 at 1:21 p.m. in Tokyo, from $1.4822 yesterday in New York. A declining U.S. currency spurs demand for commodities, including gold, as an alternative investment.
“There was a whole string of positive economic news from Europe, Japan, to the U.S., and the dollar was down,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “Last night was a strong night for commodities across the board.”
Asian stocks advanced, paring the MSCI Asia Pacific Index’s first monthly decline since February, as Japan’s jobless rate unexpectedly dropped. Yesterday, U.S. equities rallied on the return of economic growth. The Standard & Poor’s 500 Index climbed 2.3 percent to 1,066.11 in New York and the Dow Jones Industrial Average increased 2.1 percent to 9,962.58.
The U.S. economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades. The four quarterly decreases marked the longest stretch of declines since quarterly records began in 1947.
“The GDP numbers really came out of the gate,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Growth is there, four quarters of negative growth are well and truly out of our way.”
The number of Americans collecting unemployment insurance fell more than forecast to the lowest level in seven months, a government report yesterday showed. Continuing claims for jobless benefits were down 148,000 at 5.8 million in the week ended Oct. 17, the lowest level since March 21 and biggest weekly drop since July, according to the Labor Department.
Brent crude for December settlement traded at $78.02 a barrel on the London-based ICE Futures Europe exchange, slipping 2 cents at 12:30 p.m. in Singapore. Yesterday, the contract settled at $78.04 a barrel, up $2.18, or 2.9 percent, the most since Oct. 21.
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