Oil Rebounds From Biggest Drop in Two Weeks on Norwegian Strike

Oil rebounded in New York on speculation the biggest drop in two weeks was excessive as Norway faced a shutdown of its production platforms because of an energy strike.
Futures advanced as much as 0.7 percent after falling 3.2 percent on July 6, the biggest decline since June 21. A planned lockout of workers on Norwegian oil platforms will go ahead as planned at midnight unless a solution is found today, according to Bengt Eidem, a spokesman for the Norwegian Oil Industry Association. Prices slid last week after a report showed the U.S., the world’s biggest crude user, created fewer jobs than estimated in June.
“I don’t think upward momentum will be that powerful or sustained,” Jarmo Kotilaine, the chief economist at Jeddah- based National Commercial Bank who forecasts Brent crude will trade in a range of $90 to $110 a barrel, said by telephone yesterday. “Norway is an issue.”
West Texas Intermediate oil for August delivery climbed as much as 60 cents to $85.05 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.98 at 3:11 p.m. Singapore time. The contract slid $2.77 on July 6 to close at $84.45, the lowest settlement since July 2. Prices are down 14 percent this year.
Brent crude for August gained 95 cents, or 1 percent, to $99.14 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to WTI was at $14.16, from $13.74 on July 6.

Technical Support

Oil in New York has technical support along the middle Bollinger Band on the daily chart, at around $83.80 a barrel today, according to data compiled by Bloomberg. Futures halted their decline July 6 near that indicator. Buy orders tend to be clustered near chart-support levels.
Norway’s strike, which started June 24, is disrupting as much as 250,000 barrels of oil output a day, according to Statoil ASA (STL), the nation’s largest energy company. The lockout would lead to a shutdown of all oil and gas production, Eidem said by mobile phone today. Talks in Oslo supervised by a state mediator failed yesterday. Norway is western Europe’s biggest crude exporter.
Three Libyan oil ports resumed export operations after a halt because of protests, according to the chairman of state-run National Oil Corp. Demonstrators had occupied Ras Lanuf, Brega and Es-Sider to call attention to their claims of economic and political marginalization of the oil-rich eastern province of Cyrenaica, cutting crude exports by about 300,000 barrels a day, Nuri Berruien said yesterday in a phone interview from the capital, Tripoli. The country’s output will return to 1.5 million barrels a day within 24 hours, he said.

Economic Slowdown

U.S. payrolls rose by 80,000 workers in June, compared with a forecast of 100,000 in a Bloomberg News survey of economists, Labor Department data on July 6 showed. The International Monetary Fund will cut its world-growth estimate for this year, Managing Director Christine Lagarde said the same day.
The economy in China, the second-biggest oil consumer, faces “relatively large” downward pressure, Premier Wen Jiabao said, according to the official Xinhua News Agency yesterday. Japan’s machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said in a report today. The decline is the biggest since comparable data were made available in 2005.

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