Crude Heads For The $97.00 Level With Caution On Upbeat US Data

After the U.S. durable goods orders rose in December by more than the highest forecast, hopes that economic growth is picking up in the world`s largest oil consumer were triggered, pushing crude towards the $97.00 a barrel level.

The rise of the durable goods orders by 4.6% in Dec. from 0.7% previous added to the recent positive global economic data following the upbeat manufacturing data from the U.S. and China, which improves the outlook for demand on oil even further.

Crude is trading as of this writing around the $96.85 a barrel level compared with the opening at $96.44 and with the highest at $96.86 and the lowest at $96.41. On the short term crude finds support at $96.50 and resistance at $96.85 then at $97.15.

However, caution prevails as markets await the FOMC meeting and the growth report from the U.S. on Wednesday, the employment numbers from Germany on Thursday and the key jobs and manufacturing data from the U.S. and the PMI report from China on Friday.

“If these events show positive results, then it`s possible for West Texas Intermediate crude to touch $100 a barrel on Friday but if the results are worse than expected, the downside is limited to the $94 a barrel range”, said Ken Hasegawa from Newedge Japan.

Risk appetite has been improving following some positive global economic data, which is supportive to oil prices, but gasoline prices hit a three months high earlier today following news that an oil refinery in the U.S. northeast region will close.

“As US refiners typically build up stocks over spring to meet peak summer demand, the closure of this refinery is supporting ideas that the supply of gasoline in the summer could tighten”, said ANZ.

Brent is trading as of this writing around the $113.55 after rising 0.06%; natural gas is trading at $3.244 per 1,000 cubic feet after falling 1.37%; gasoline is trading at $2.930 a gallon after falling 0.16%; heating oil is trading at 3.0605 after falling 0.04%.

Adding o the upside pressures on oil prices are the persisting tension in the Middle East and North Africa, which trigger worries of a possible supply disruption from the region. Militants attacked an oil pipeline in northern Algeria killing two guards.

While in Egypt protests continue despite the state of emergency imposed by the president. Iran launched a live monkey into space to show off its missile systems that scared the West since this technology could be used to build nuclear weapons.

Yet, some assurance comes from OPEC’s Secretary-General Abdullah al-Badri who said that overall, “the world oil market should remain well supplied in 2013 and thereby OPEC does not need to trim back its oil output”.

Markets await later today the release of the US’s and Germany’s consumer confidence and the US’s house prices, while Pfizer and Ford are among the companies that will release their fourth quarter earnings today.