Oil weekly recap, November 18 – November 22

West Texas Intermediate crude fell on Friday but snapped six straight weekly declines, supported by upbeat key economic data from the U.S. and a smaller-than-expected build in U.S. crude inventories in the week ended November 15. However, rising stockpiles at Cushing, Oklahoma, indicated demand still hasnt picked up at the right pace and limited gains. WTI and especially Brent drew support as Iranian envoys and their counterparts from the five permanent members of the U.N. Security Council and Germany reconvened in Geneva this week for a third round of talks over the Islamic republics disputed nuclear program but an interim agreement remained elusive. However, a preliminary deal seemed more likely by the end of the week with U.S. Secretary of State John Kerry arriving on Saturday in Geneva to join talks.

On the New York Mercantile Exchange, WTI crude for delivery in January fell by 0.64% to $94.83 per barrel on Friday. Prices shifted in a days range between $94.07 and $95.56, near Thursdays three-week high of $95.59. The American benchmark rose by 1.7% on Thursday, the most in two months, and settled the week 1.2% higher, ending its longest losing streak since 1998.

Meanwhile on the ICE, Brent futures for settlement in January advanced by 0.49% on Friday to $110.62 a barrel. Prices held in a days range between $109.66 and $111.40, the strongest level since October 11, widening Brents premium to WTI to the highest in eight months. The European benchmark rose by 2.1% on Thursday, the most since October 23, and settled the week 2.1% higher.

WTI drew support throughout the week after overall upbeat data from the U.S. indicated Octobers 16-day government shutdown had little-to-no-effect on the worlds biggest economy, suggesting robust demand for petroleum products.

The U.S. Department of Labor reported that retail sales rose by 0.4% last month, exceeding the median estimate of 86 analysts surveyed by Bloomberg for a minor 0.1% advance. September’s reading received and upward revision to 0.0% after being initially estimated at -0.1%.

Meanwhile, core retail sales, which exclude the volatile automobile market, jumped by 0.2% last month after September’s reading was revised down to 0.3% from initially calculated at 0.4%. Core retail sales correspond closely with the consumer spending component of gross domestic product (GDP). Their jump was largely based on increased demand for clothing, electronics, furniture and sporting goods.

On Thursday, the Department of Labor said the number of people who filed for unemployment assistance in the United States decreased by 21 000 to reach 323 000 during the week ending on November 16th 2013, or the lowest number since September. Expectations pointed that the number of claims will fall less, to 335 000. Last week contained a national holiday, as during such days the number of submitted claims is lower than usual. The average number of claims during the past four weeks, an indicator considered as lacking seasonal effects, dropped by 6 750 to 338 500.

Also fanning positive sentiment, the Energy Information Administration reported on Wednesday that crude stockpiles rose by 0.4 million barrels to 388.5 million in the week ended November 15, the highest level since June, and were well above the upper limit of the average range for this time of the year. The gain however was smaller than a predicted 1 million barrel increase according to the median estimate of 11 analysts surveyed by Bloomberg News. However, another build in inventories at Cushing, Oklahoma, the biggest U.S. storage hub and delivery point for NYMEX-traded contracts, limited gains.

The report also revealed that both motor gasoline and distillate fuel production decreased last week, averaging 9.3 and 4.9 million barrels per day, respectively. Motor gasoline inventories fell by 0.3 million barrels and matched analysts expectations, remaining above the upper limit of the average range for this time of the year. Distillate fuel stockpiles decreased by 4.8 million barrels last week, sharply exceeding projections for a drop of 280 000 barrels, and were near the lower limit of the average range.

Iran talks

The oil market also drew support with Brent surging to the highest since mid-October as Iranian diplomats and their counterparts from the five permanent members of the U.N. Security Council and Germany hadnt reached a deal over the Islamic republics nuclear activity by Friday. An interim deal however seemed more likely by the end of the week.

U.S. Secretary of State John Kerry arrived in Geneva on Saturday to join talks on Irans nuclear program, which has been the reason for U.S. and E.U. sanctions that limited the Islamic republics access to international banking and curbed its oil exports, removing more than 1 million barrels of oil per day from the global market.

Diplomats said earlier that a formidable sticking point in negotiations may have been overcome with major powers not explicitly recognizing Irans right to enrich uranium but acknowledging each countrys freedom to develop its own civilian nuclear energy.

Russian Deputy Foreign Minister Sergei Ryabkov said a breakthrough now seemed closer than the previous round of talks earlier in November but Irans demand to continue the construction of a heavy-water reactor near Arak that could produce bomb materials remained an unresolved issue.

U.S. State Department spokeswoman Jen Psaki said that John Kerry left for Geneva “with the goal of continuing to help narrow the differences and move closer to an agreement.”

“We are close to a deal but still differences over two-three issues remain,” said Iranian Deputy Foreign Minister Abbar Araqchi.

An interim accord would suspend Irans enrichment of uranium to 20% purity, require U.N. nuclear inspections and an Arak reactor shutdown in exchange for unfreezing billions of Iranian dollars in foreign bank accounts and easing sanctions on trade in crude oil and petroleum products, precious metals and aircraft parts.

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