By Margot Habiby
Oil fluctuated as U.S. consumer confidence increased more than forecast in April, a sign demand may improve, and after the head of Saudi Arabia’s national oil company said the kingdom isn’t comfortable with current prices.
Crude edged higher after the Conference Board reported its confidence index rose as six straight months of job growth and a two-year low in joblessness helped sustain consumer purchases in March. Khalid al-Falih, chief executive officer of Saudi Arabian Oil Co., said the world’s biggest oil exporter is concerned about the impact of prices on economic growth.
“While the confidence report provided a bump, we’ll have to see if any kind of strength is maintained throughout the day,” said Jason Schenker, president of Prestige Economics, an energy advisory firm in Austin, Texas. “There are so many factors pushing and pulling at this market.”
Oil for June delivery fell 31 cents to $111.97 a barrel at 11:17 a.m. on the New York Mercantile Exchange. Prices have gained 33 percent in the past year. Yesterday, futures touched $113.48, the highest intraday price since Sept. 22, 2008.
Brent crude for June settlement on the London-based ICE Futures Europe exchange climbed 23 cents to $123.89 a barrel.
The Conference Board’s confidence index increased to 65.4 from a revised 63.8 reading in March, figures from the New York- based private research group showed today. The median forecast of economists surveyed by Bloomberg News projected an advance to 64.5. The gain signaled the improving labor market is helping Americans weather rising fuel costs.
U.S. Economy
The Standard & Poor’s 500 Index rose above its highest closing level since June 2008 on positive earnings reports from companies including United Parcel Service Inc., Ford Motor Co. and 3M Co. The index gained 0.8 percent to 1,345.42.
U.S. Treasury Secretary Timothy Geithner said today that oil prices have become an obstacle to economic improvement.
“We’ve got some new headwinds, most prominently of course in oil,” Geithner said today at the Council on Foreign Relations in New York. “What’s happening in oil is obviously potentially very significant. At current levels, on its own, it won’t put the recovery at risk.”
Residential real estate prices dropped by the most in more than a year in February, a sign the U.S. housing market is struggling to stabilize, according to the S&P/Case-Shiller index of property values in 20 cities.
U.S. Airways Group, the smallest of the U.S. full-fare carriers, posted a wider loss in the first quarter as jet fuel prices surged 33 percent, the Tempe, Arizona-based said in a statement today. Coca Cola Co., the world’s largest soft-drink maker, is “pressured” by rising commodity prices, Chief Executive Officer Muhtar Kent said today on a conference call.
Price Impact
“There are more and more stories about the effect of high oil prices on corporate earnings and on people’s summer vacations,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. The Saudi statement “implies they’re not going to step in if prices weaken a bit.”
Earlier, oil declined as much as 1 percent after Aramco’s al-Falih said the world’s biggest oil exporter is concerned about the impact of prices on economic growth.
Saudi Arabia is committed to maintaining 3 million to 4 million barrels a day of idle capacity, al-Falih said in Seoul.
“We are not comfortable with oil prices where they are today,” al-Falih said. “We’re concerned about the impact it could have on global economic growth.”
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net.
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