BLBG: Crude Oil Rises for First Time in Three Days as Dollar Weakens
By Grant Smith
Sept. 15 (Bloomberg) -- Oil rose for the first time in three days as the dollar traded near its lowest against the euro in a year, spurring demand for crude as an inflation hedge.
Oil extended gains as sales at U.S. retailers surged in August by the most in three years. 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.
“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 95 cents, or 1.4 percent, to $69.81 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $69.60 a barrel as of 1:41 p.m. London time.
Yesterday, the contract fell to $68.86, the lowest settlement since Sept. 4. Futures have gained 55 percent this year.
The Organization of Petroleum Exporting Countries raised its global oil demand forecasts for this year and 2010 on expectations the world economy will return to growth.
OPEC, responsible for about 40 percent of worldwide oil supply, boosted its 2010 outlook by 150,000 barrels a day and 2009 by 140,000 barrels a day. The group now predicts that consumption will contract 1.8 percent this year to average 84.05 million barrels a day, and then expand 0.6 percent in 2010 to 84.56 million a day.
Energy Department
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.
U.S. crude oil inventories are likely to have fallen last week as refineries bought fewer cargoes before idling plants for upgrades and repairs. 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.
“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.”
‘Utmost Zeal’
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 crude oil for October settlement on the London-based ICE Futures Europe exchange traded at $67.65 a barrel, 21 cents higher, at 1:39 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 $68.60 a barrel, up 23 cents.
The Organization of Petroleum Exporting Countries releases its month report on global oil markets later today.
