BLBG; Oil Falls on Concern Investment May Slow as China Curbs Lending
By Ann Koh
Jan. 8 (Bloomberg) -- Crude oil fell for a second day in New York on concerns investment in commodities may slow after China took steps to tighten bank lending.
Oil also dropped for the first time in 11 trading days yesterday after the number of Americans filing first-time jobless claims gained less than forecast, driving the dollar higher. China’s central bank sold three-month bills at a higher interest rate for the first time in 19 weeks to control expansion in lending.
“Crude prices have been driven by investment money,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo. “The situation in the U.S. is getting better, but people are still not really confident. Unemployment ratio is still high.”
Crude oil for February delivery fell as much as 50 cents, or 0.6 percent, to $82.16 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.28 at 2:38 p.m. in Singapore. Yesterday, the contract declined 52 cents to settle at $82.66, the first drop since Dec. 21.
The dollar traded little changed after gaining yesterday. It was at $1.4312 per euro from $1.4308. A stronger dollar curbs the appeal of commodities to investors.
Initial jobless applications increased by 1,000 to 434,000 in the week ended Jan. 2, the Labor Department said yesterday. Economists forecast claims would rise by 7,000, according to the median of 28 projections in a Bloomberg News survey. Data today may show employment was unchanged in December after almost two years of job cuts.
CFTC Hearing
The U.S. Commodity Futures Trading Commission will propose limits next week on how many futures contracts traders can hold to curb energy speculation.
The CFTC will hold a hearing in Washington on Jan. 14 to consider issuing a proposed rule, according to a statement released yesterday. The commission held hearings last year amid concerns that speculators contributed to record-high commodity prices in 2008, when oil reached $147.27 a barrel.
“That’s a part of the reason prices have been down, but not a major reason,” said Emori. “They will not really be able to do anything. It is quite difficult.”
U.S. inventories of gasoline increased by 3.74 million barrels to 220 million last week, the highest since the week ended Jan. 16, 2009, according to an Energy Department report on Jan. 6. Supplies of distillate fuel, a category that includes heating oil and diesel, declined by 233,000 barrels.
Frigid Weather
Oil rose to its highest in more than 14 months on Jan. 5 as freezing weather in the U.S., China and Europe supported a rally in prices. Temperatures in the U.S. Northeast, which consumes about four-fifths of the country’s heating oil, are forecast to remain “near normal” through Jan. 17, according to the National Weather Service. The cold spell in the region will end next week, the government agency reported.
A cold front will hit northern China today, with snowfall forecast for several provinces in that area and the municipalities of Beijing and Tianjin, the China Meteorological Administration said on its Web site late yesterday.
Crude oil may fall next week on speculation that U.S. inventories will climb for a second week and as fuel demand declines, a Bloomberg News survey showed.
Nineteen of 43 analysts, or 44 percent, said oil will drop through Jan. 15. Fifteen respondents, or 35 percent, forecast that the market will climb and nine said prices will be little changed. Last week, 44 percent of analysts forecast a gain.
Brent crude oil for February settlement fell as much as 51 cents, or 0.6 percent, to $81 a barrel on the London-based ICE Futures Europe exchange. It was at $81.11 a barrel at 2:36 p.m. Singapore time. Yesterday, the contract fell 38 cents, or 0.5 percent, to $81.51.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
