WTI futures swing on downbeat U.S. consumer confidence, inventories data in focus

West Texas Intermediate swung between gains and losses in late European and early American trading after the Conference Board reported that consumer confidence in the worlds top oil consumer fell for a third consecutive month in November, while upbeat housing data supported prices. Expectations that U.S. crude oil stockpiles fell for the first time in ten weeks in the seven days to November 22 continued to underpin the market.

On the New York Mercantile Exchange, WTI crude for settlement in January traded at $94.17 per barrel at 15:24 GMT, up 0.09% on the day. Prices held in range between days high of $94.68 and session low of $93.84. The U.S. benchmark fell on Monday but trimmed its weekly decline to 0.7% on Tuesday.

Meanwhile on the ICE, Brent futures for delivery in January rose by 0.27% to $111.30 per barrel by 15:25 GMT. Prices ranged between $111.48 and $110.52 a barrel. The European benchmark rose on Monday and extended its weekly advance to over 0.5% on Tuesday.

The Conference Board reported that its Consumer Confidence Index fell to 70.4 in November, a third straight monthly decline. Analysts expected a slight retreat to 72.1 after confidence sharply declined in October to a revised 72.4 from 80.2 in September. The Present Situation Index slipped to 72.0 from 72.6, while the Expectations Index declined to 69.3 from 72.2 last month.

Lynn Franco, Director of Economic Indicators at The Conference Board, commented on the report: “Consumer confidence declined moderately in November after sharply declining in October. Sentiment regarding current conditions was mixed, with consumers saying the job market had strengthened, while economic conditions had slowed. However, these sentiments did not carry over into the short-term outlook. When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions.”

Housing data supports demand prospects

A report by the Commerce Department showed that permits for U.S. home construction, which lead housing starts by at least a month, rose to the highest level in nearly 5-1/2 years in October, indicating a robust recovery of the U.S. housing market. Building permits jumped to 1.034 million last month, defying expectations for a decrease to 0.940 million. Permits surged to 0.970 million in September, beating expectations for a rise to 0.930 million from Augusts 0.926 million.

Year-on-year, building permits surged by 13.9% in October, while on monthly basis they advanced by 6.2% following a 5.2% gain in September.

Although building permits are not included in the calculation of GDP growth, they are a closely monitored indicator of economic activity and the better-than-expected readings in the past couple of months suggested a robust housing market recovery and little-to-none negative impact from the 16-day government shutdown in October.

Investors became wary recently as higher mortgage rates slowed the pace of home sales. The National Association of Realtors reported on Monday that the number of contracts to buy previously owned homes in the U.S. unexpectedly fell in October for a fifth consecutive month. Pending home sales declined by 0.6%, defying projections for a 1.3% jump following September’s 4.6% contraction, which was the weakest level in six months.

The decline was based on higher mortgage rates and increasing prices due to tighter supply, which drove some prospective buyers away from the real estate market. The association reported that purchases fell by 2.2% from a year earlier on an unadjusted basis.

Demand for accommodation as household formation however continues to recover and is expected to keep housing construction supported. Permits for the multi-family home sector rose by 15.3% last month following a 20.1% jump in September, while single-family home permits, the biggest segment of the market, jumped by 0.8% after falling 1.9% in the preceding month.

Meanwhile, a separate gauge measuring prices of single-family home prices in the U.S. jumped in September to the highest annualized level in 7-1/2 years. The S&P/Case-Shiller Composite-20 Home Price Index, which measures prices at 20 metropolitan areas, rose by an annualized 13.3% in September, beating forecasts for a moderate gain to 13.0% from Augusts 12.8% increase. Month-on-month, numbers matched forecasts for a 0.7% increase, following a 1.3% jump in August.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement: “Housing continues to emerge from the financial crisis: the proportion of homes in foreclosure is declining and consumers balance sheets are strengthening.”

Inventories data

The oil market drew support on expectations that U.S. crude oil stockpiles fell last week, snapping nine straight weeks of gains. According to a weekly Bloomberg News Survey, U.S. crude inventories fell by 300 000 barrels in the week ended November 22, retreating from the highest level since June. Motor gasoline supplies are projected to have jumped by 1 million barrels last week. Distillate fuel inventories likely declined by 1.03 million to a five-year low of 111.5 million after the EIA reported a 4.8 million decline in its latest report.

The industry-funded American Petroleum Institute will release its separate report later on Tuesday. API’s statistics however are considered as less reliable than numbers by the EIA as they are based on voluntary information from operators of refineries, pipelines and bulk terminals, while the government requires reports to be filed with the EIA.