BLBG : Crude Oil Rises for First Time in Three Days as Dollar Weakens
Sept. 15 (Bloomberg) -- Crude oil rose for the first time in three days as the dollar traded near its lowest level against the euro in a year, spurring demand for crude as an inflation hedge.
The U.S. Energy Department will probably say tomorrow that supplies of distillate fuel, which includes diesel and heating oil, rose for a fourth week from their highest level since 1983, according to a Bloomberg News survey. U.S. crude oil inventories are likely to have fallen last week as refineries bought fewer cargoes before idling plants for upgrades and repairs.
“The U.S. currency continues to set the trend for oil in the absence of any major fundamental developments,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “We’ll probably see more sideways trading ahead of the inventory numbers.”
Crude oil for October delivery rose as much as 56 cents, or 0.8 percent, to $69.42 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $69.17 a barrel as of 12:19 p.m. London time. Yesterday, the contract fell to $68.86, the lowest settlement since Sept. 4. Futures have gained 55 percent this year.
Fuel stockpiles in the world’s biggest energy users, including the U.S. and Japan, have risen as the global recession crimped demand. Refiners are cutting output to boost processing profit as consumption slows with the end of the peak U.S. driving period last week.
“As soon as the gasoline demand season is over, we should be looking at higher inventories,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo. “That’s quite a bearish factor for the crude oil market.”
Rising Stockpiles
Crude oil tumbled to $32.40 a barrel in December, the lowest in more than four years, after the collapse of Lehman Brothers Holdings Inc. on Sept. 15, 2008, triggered a global financial crisis that sapped energy demand.
“In the sense that the collapse of Lehman precipitated a further deepening of the financial crisis, it has certainly affected oil pricing,” said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. “And the collapse also affected trading at other banks.”
U.S. stockpiles of distillate may have increased 1.5 million barrels from 165.6 million in the week to Sept. 11, according to the median of 11 estimates from analysts.
Gasoline inventories probably climbed 700,000 barrels from 207.2 million previously, the survey showed. Refineries are expected to have operated at 86.7 percent of capacity last week, a drop of 0.5 percentage point. Commercially held U.S. crude oil inventories declined 2.5 million barrels from 337.5 million, according to the median of survey responses.
Refinery Shutdowns
The Energy Department is scheduled to release its Weekly Petroleum Status Report in Washington tomorrow. The industry- funded American Petroleum Institute will put out its own data later today.
“The gasoline season is over and refineries are ramping up maintenance schedules,” Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania, said in a note. “As such, demand for crude oil is about to dip. If we are ever going to get a correction lower in oil, the time is now.”
The main militant group in Nigeria said it will end its 60- day cease-fire today as it threatened to resume sabotage attacks “with utmost zeal.”
The Movement for the Emancipation of the Niger Delta, or MEND, which seeks more local control of the delta’s oil wealth, declared a unilateral cease-fire July 15 after the government freed its leader, Henry Okah, who was on trial for treason. MEND rejected a government amnesty program, saying it failed to address its political demands.
Brent Stable
MEND spokesman Jomo Gbomo said in an e-mail he wouldn’t “speculate” when attacks may resume. Armed attacks targeting the oil industry have cut more than 20 percent of Nigeria’s oil exports since 2006 and deterred new investments. The country vies with Angola as Africa’s top oil producer and is the fifth- largest source of U.S. oil imports.
Brent crude oil for October settlement on the London-based ICE Futures Europe exchange traded at $67.42 a barrel, down 2 cents, at 12:20 p.m. in London. Yesterday, it fell 0.4 percent to settle at $68.37.
The October contract expires today. The more active November future was at $68.34 a barrel, down 3 cents.
The Organization of Petroleum Exporting Countries releases its month report on global oil markets later today.
