BLBG: Crude Oil Rises in New York as Four-Day Drop as Dollar Weakens
By Ben Sharples and Christian Schmollinger
Dec. 8 (Bloomberg) -- Crude oil rose for the first time in five days as investors viewed yesterday’s 2 percent drop to below $75 a barrel as too far and fast a decline.
Oil snapped four days of losses as the dollar slipped against the euro, increasing the appeal of commodities as an alternative investment. The contract has traded between $75 and $82 a barrel for seven weeks and yesterday settled below $75 for the first time since Oct. 13.
“Markets had for a while started to get used to the $75 to $80 a barrel range for oil, and the move to the lower part of that range is probably attracting some buying,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “The U.S. dollar eased back and that’s been another factor why the oil price has lifted.”
Crude oil for January delivery gained as much as 46 cents, or 0.6 percent, to $74.39 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.18 a barrel at 2:52 p.m. Singapore time. Yesterday, the contract fell $1.54, or 2 percent, to $73.93. Prices have climbed 66 percent this year.
The dollar weakened as much as 0.3 percent against the euro in Asian trade and was at $1.4842 per euro at 3:55 p.m. in Tokyo from $1.4827 per euro yesterday in New York.
Oil dropped yesterday as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will face a weak labor market and tight credit, signaling fuel demand will be slow to recover.
Bernanke’s comments “gave markets a bit of a reality check and made people reassess how they thought the recovery is going to pan out,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “As a result oil got sold off.”
Oil Supplies
U.S. crude oil inventories probably gained 750,000 barrels in the week ended Dec. 4, according to the median response from 12 analysts surveyed by Bloomberg News before an Energy Department report tomorrow in Washington.
Gasoline stockpiles increased by 1.68 million barrels, from 214.1 million the prior week, the estimates showed.
Supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 900,000 barrels from 165.7 million previously, according to the survey.
The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.
China Data
Economic data out of China, the world’s second-largest energy consumer, is expected to show a continued expansion, providing support for oil prices.
Industrial production probably rose 18.2 percent in November from a year earlier, according to a survey of economists before this week’s report. Output climbed by 16.1 percent in October.
“Chinese economic data out this week is likely to be relatively strong, and markets have also come to the view that OPEC is most likely to leave oil production targets unchanged at the Dec. 22 meeting,” Moore said.
Brent crude oil for January settlement rose as much as 59 cents, or 0.8 percent, to $77.02 a barrel on the London-based ICE Futures Europe exchange. It was at $76.88 a barrel at 2:55 p.m. Singapore time. Yesterday, the contract dropped $1.09, or 1.4 percent, to $76.43, the lowest settlement since Nov. 13.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
