BLBG: Crude Oil Retreats After Reaching a One-Year High Above $79
By Margot Habiby
Oct. 19 (Bloomberg) -- Crude oil retreated from its highest level in a year on speculation that supplies are too high to justify the surge in prices.
Oil slid after topping $79 a barrel, breaking its longest winning streak since July. U.S. supplies of gasoline were 4.3 percent above the five-year average in the week ended Oct. 9, according to the Energy Department.
“Everybody’s watching for signs of rising production rates and declines in gasoline inventories,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Until we get our inventory figures for this week, we’re kind of stuck following the equities and the dollar.”
Crude oil for November delivery fell 14 cents to $78.39 a barrel at 9:30 a.m. on the New York Mercantile Exchange.
Earlier, prices touched $79.05 a barrel, the highest level since Oct. 15, 2008, as advancing equities bolstered confidence that an economic recovery will lift fuel consumption. U.S. industrial production climbed more than economists forecast last month, a report on Oct. 16 showed.
The November contract expires tomorrow. The more widely held December contract fell 24 cents, or 0.3 percent, to $78.78 a barrel.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,088.89 and the Dow Jones Industrial Average climbed 23.96 points, or 0.2 percent, to 10,019.87 at 9:50 a.m. in New York.
The dollar was little changed at $1.4907 per euro, compared with $1.4905 on Oct. 16.
Oil at $80
“I wouldn’t expect oil prices to cross $80 a barrel and stay there,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “Optimism from equities still seems to be channeling into the oil market. But you still need to see an improvement on the demand side before there’s support above $80.”
Oil futures posted their biggest weekly gain in almost two months last week. Prices have increased 23 percent in the past three months as a recovery in equity markets emboldened investors, and the sliding U.S. dollar prompted buying of commodities.
Brent crude oil for December settlement fell 8 cents to $76.91 a barrel on the London-based ICE Futures Europe exchange.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
