Fleet Companies Will Have Higher Diesel Fuel Prices To Deal With

Oil traded above $88 a barrel in New York after a decline in U.S. jobless claims bolstered speculation the economic recovery may boost fuel demand in the world’s biggest crude-consuming nation. Time to put your fuel management pants on and make sure you have a good fuel card.

Futures rose as much as 1.1 percent yesterday after the Labor Department said applications for unemployment benefits dropped 17,000 to 421,000. Economists forecast claims would fall to 425,000, according to a Bloomberg News survey. Prices climbing to $100 may indicate “something wrong with fundamentals” in the market and lead OPEC to act, said Abdalla El-Badri, the organization’s secretary-general.

“The market is reading the jobless claims as a barometer to where we see demand for commodities, in particular oil,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “OPEC is meeting this weekend and they won’t do anything until it reaches $100 a barrel.” With $100 a barrel, diesel fuel prices will top $3.50. This will raise fleet companies, fueling prices.

The January contract was at $88.57 a barrel, up 20 cents, in electronic trading on the New York Mercantile Exchange at 10:36 a.m. Singapore time. Yesterday, it added 9 cents to settle at $88.37. Prices are down 0.7 percent this week and 12 percent higher this year.

China’s November oil imports rebounded to 20.91 million metric tons, or about 5.1 million barrels a day, from October’s 16.4 million, according to preliminary data today from the General Administration of Customs in Beijing. Refiners in the world’s second-largest oil consuming nation have been ramping up fuel production to meet a shortfall in diesel fuel prices and supplies.

‘Suitable Levels’

The U.S. Labor Department said the number of people continuing to collect jobless benefits slipped by 191,000 to 4.09 million. Economists forecast a drop to 4.24 million.

“Oil prices firmed after U.S. jobless claims fell more than expected and revived hopes that a labor market recovery is under way,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note.

Crude prices are at “suitable levels,” OPEC’s El-Badri said yesterday in Quito, Ecuador, where the organization will meet Dec. 11 to review its output. Demand is growing fast in China and India and moderately in members of the Organization for Economic Cooperation and Development, he said. Oil climbed to $90.76 a barrel on Dec. 7, the highest intraday price since October 2008. Most fleet companies will need to increase their fleet management.