BLBG : Oil Trades Near $72 After Supplies Drop to Lowest Since January
Sept. 17 (Bloomberg) -- Oil traded near $72 a barrel in New York after the U.S. Energy Department reported that crude stockpiles in the biggest energy consuming nation dropped to the lowest level since January.
Crude inventories fell 4.73 million barrels, the weekly report showed yesterday, more than the 2.5 million-barrel decline forecast in a Bloomberg News analyst survey. Prices also gained as the dollar declined to the weakest level in almost a year and as global equities advanced, spurring expectations of improving fuel demand.
“The gains in equities support optimism for the economic recovery that would drive oil demand and lead to supply tightness,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “The big drawdown was unexpected and supportive for prices.”
Crude oil for October delivery was at $72.28 a barrel, down 23 cents, in electronic trading on the New York Mercantile Exchange at 11:16 a.m. in Singapore. Yesterday, the contract rose $1.58, or 2.2 percent, to $72.51. Futures are up 62 percent this year.
The dollar traded at $1.4716 per euro at 10:36 a.m. in Tokyo from $1.4709 yesterday in New York where it reached $1.4737, the weakest level since Sept. 25, 2008. A lower dollar increases the appeal of commodities as alternative investments.
“The dollar continues to hit new lows and equities markets are rallying, giving support to the renewed global economy which will consume more oil,” said Mike Sander, an investment adviser at Sander Capital in Seattle. “There are not a lot of reasons to bet against oil at this point.”
Fuel Supplies
U.S. crude oil stockpiles fell to 332.8 million barrels, the Energy Department said. Supplies of distillate fuel climbed 2.24 million barrels to 167.8 million, the highest since January 1983. Gasoline inventories rose 547,000 barrels to 207.7 million last week, the department said.
Imports decreased 2.1 percent to an average 8.9 million barrels a day. Refineries operated at 86.9 percent of capacity in the week ended Sept. 11, down 0.3 percentage point from the previous week, according to the department.
Refiner’s profit margins have collapsed in the past month on expectations of falling fuel demand with the end of the peak summer demand season for gasoline.
The profit from turning three barrels of crude into two barrels of gasoline and one barrel of heating oil has dropped to $4.72 a barrel today from $13.46 a month earlier.
‘Troubling Signs’
“The crack spread and refining margins and the distillate inventories are all troubling,” said Purvin & Gertz’s Shum. “It points to the fact that U.S. refiners are likely to cut runs in the coming weeks.”
Asian stocks rose, with the MSCI Asia Pacific Index gaining 1.3 percent to 119.11 as of 12:14 p.m. in Tokyo, the highest since Sept. 8, 2008. The gauge has climbed 69 percent from a more than five-year low on March 9.
The Standard & Poor’s 500 Index gained 1.5 percent in New York yesterday and the Dow Jones Industrial Average added 108.3 points, or 1.1 percent.
Brent crude oil for November settlement was at $71.37 a barrel, down 30 cents, on the London-based ICE Futures Europe exchange at 11:18 a.m. Singapore time.
