BLBG : Oil Trades Near $72 as Asian Equities Gain on U.S. Confidence
Aug. 26 (Bloomberg) -- Crude oil was little changed on renewed optimism over the prospects for a recovery in global demand, as Asian share markets advanced on a gain in U.S. consumer confidence.
Oil recovered to above $72 a barrel, rising alongside equities after the Conference Board’s measure of U.S. consumer sentiment topped projections in August, the first increase in three months. Sales of new houses in the country probably increased, signaling the housing crisis that crippled the world’s largest economy may be easing.
“On the Nymex yesterday spot WTI hit $75 on the floor” before settling lower, Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania, said in his daily note to clients. ‘Yesterday’s action means nothing, it was just noise.”
Crude oil for October delivery was at $72.11 a barrel, up 6 cents, in after-hours trading on the New York Mercantile Exchange at 12:20 p.m. in Singapore. Earlier today oil dropped as much as 70 cents, or 1 percent, to $71.35 a barrel, extending yesterday’s 3 percent decline made after an unexpected increase in U.S. crude oil stockpiles as measured by the American Petroleum Institute. Futures have gained 62 percent in 2009.
The MSCI Asia Pacific Index was up 0.7 percent to 113.87 as of 12:51 p.m. in Tokyo, the strongest in more than a week. Yesterday, the Standard & Poor’s 500 Index added 0.2 percent to 1,028 and the Dow Jones Industrial Average rose 0.3 percent to 9,539.29 on the consumer confidence report. Both measures of U.S. equities reached their highest levels of 2009.
Gasoline Stockpiles
U.S. gasoline inventories probably fell 800,000 barrels from 209.8 million barrels the week before, having already declined for four weeks, according to the median of 14 estimates from analysts before a Department of Energy report.
The API yesterday reported a 1.8 million-barrel drop in gasoline stockpiles. Totals from the API and DOE moved in the same direction 76 percent of the time over the past four years, Bloomberg data shows.
“The summer driving season is coming to a close and looking ahead into the fall, consumption could remain flat to down,” said Mike Sander, an investment adviser with Sander Capital in Seattle.
Commercially held U.S. crude oil inventories probably declined 1.15 million barrels last week from 343.6 million, a four-week high, according to the median of responses from the Bloomberg survey. The API yesterday posted an increase of 4.35 million barrels.
Inventories ‘Very High’
“The inventory level is still very high,” Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co., said in an interview on Bloomberg Television. “We’re actually not that optimistic about prices over the fourth quarter because of the inventory buildup.”
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires reports to be filed weekly. The Energy Department will release its Weekly Petroleum Status Report at 10:30 a.m. in Washington.
The slump in Japan’s exports deepened in July, suggesting the demand boost that helped lifted Asia’s largest economy out of recession last quarter may be short-lived.
“ The weak number on exports from Japan means other countries don’t really have room to buy -- they are struggling to recover,” said Tetsu Emori, a commodity fund manager at Astmax Co. Ltd. in Tokyo. “So it’s not really good news.”
Brent crude oil for October settlement traded at $71.89 barrel on the London-based ICE Futures Europe exchange, up 7 cents at 12:18 p.m. Singapore time. Yesterday, the contract fell $2.44, or 3.3 percent, to $71.82.
