BLBG: Oil Rises From a Five-Week Low as Dollar Drop Spurs Hedging
By Grant Smith and Yee Kai Pin
Nov. 25 (Bloomberg) -- Crude oil rose from a five-week low as the dollar’s drop against higher-yielding currencies drew investors seeking an inflation hedge to commodities.
The U.S. Energy Department will probably say crude-oil inventories grew by 1.5 million barrels last week, according to a Bloomberg survey before the Department’s report later today. Yesterday, the American Petroleum Institute said that distillates fuels such as heating oil and diesel fell by 2.36 million barrels last week.
“We’re in an up-leg right now,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “The weak dollar combined with a sense that economic recovery remains in progress is giving the market some life, but we’re not ready to break the range just yet.”
Crude for January delivery rose as much as 58 cents, or 0.8 percent, to $76.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $76.46 a barrel at 9:33 a.m. London time.
Yesterday, it fell $1.54, or 2 percent, to $76.02 a barrel, the lowest settlement since Oct. 14. Prices have gained 71 percent this year.
“It’s the weakening dollar,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “Gold and the stock markets are extending their year highs, so I believe the crude oil market will be steady.”
The dollar briefly weakened beyond $1.50 to the euro after a Japanese report showed the country’s exports dropped at the slowest pace in a year.
Thanksgiving Holiday
Floor trading at the Nymex is suspended tomorrow for the U.S. Thanksgiving holiday and the exchange will close early on Nov. 27.
The U.S. Energy Department will probably post a 1.5 million-barrel increase in crude oil inventories in its Weekly Petroleum Status Report, due today at 10:30 a.m. in Washington, a Bloomberg News survey showed.
Analysts were split over whether stockpiles of distillate fuel, a category that includes heating oil and diesel, rose or fell in the week to Nov. 20. Inventories were likely unchanged at 167.4 million, according to the median estimate from 17 analysts.
“I’m in the camp that we’re going to move sideways from here,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “Demand growth isn’t that strong, especially in the U.S. and we do have high inventories, so I think in the short term we could see high volatility.”
Crude Inventories
The American Petroleum Institute reported yesterday crude oil inventories increased 3.35 million barrels to 336.4 million last week. Gasoline stockpiles rose 1.71 million barrels to 212.2 million, while distillates fell 2.36 million to 166.9 million, the industry-funded group said.
U.S. gasoline consumption dropped 1.4 percent, the first year-on-year decline in two months, according to a report yesterday by MasterCard Inc., the second-biggest credit card company.
Brent crude oil for January delivery on the London-based ICE Futures Europe exchange rose as much as 69 cents, or 0.9 percent, to $77.15 barrel. The contract traded at $77.07 a barrel at 9:09 a.m. in London.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
