BLBG: Oil Little Changed Near $80 as Dollar Outlook Slows Crude Rally
By Grant Smith
Feb. 22 (Bloomberg) -- Crude oil traded little changed near $80 a barrel in New York as expectations for a stronger dollar slowed last week’s advance in prices.
Crude futures climbed 7.7 percent last week as U.S. Commodity Futures Trading Commission data showed that hedge-fund managers and other large speculators increased bets on rising prices for the first time since mid-January. Strikes continued at Total SA refineries and depots in France, supporting prices of refined products such as gasoline.
“There are solid reasons for the market to fall, with the stronger dollar and winter demand coming to an end,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “But with oil inventories looking a little tighter now, financial players may decide to keep invested in crude for the time being.”
Crude oil for March delivery was at $79.95 a barrel, 14 cents higher in after-hours electronic trading on the New York Mercantile Exchange as of 11 a.m. London time. Earlier it rose as much as 70 cents, or 0.9 percent, to $80.51 a barrel.
The contract, which expires today, rose 0.9 percent to $79.81 a barrel on Feb. 19, the highest settlement since Jan. 12. The more actively traded April contract was at $80.18.
Workers at Total’s six French oil-processing plants and six of its 31 storage depots have been on strike since Feb. 16 to protest against the permanent shutdown of refining at its Flanders plant in northern France.
Derivative traders are signaling that the euro’s slump to a nine-month low will continue even if European Union leaders bail out Greece. Short-term rates for borrowing in euros in the forwards market are the cheapest relative to loans in dollars since September.
Refinery Rates
Oil prices climbed 7.7 percent last week, the biggest gain since October, as U.S. refiners lifted operating rates for a second week and the Federal Reserve increased its discount rate for the first time in three years amid signs of recovery in the nation’s economy.
“That growth story suggests that oil prices will continue to firm as the global economy recovers,” said Toby Hassall, research analyst with CWA Global Markets Pty in Sydney. “But that firming dollar, if it does continue, that will keep prices fairly well in check.”
Speculative net-long positions, the difference between orders to buy and sell the commodity, jumped 63 percent to 68,436 contracts on the New York Mercantile Exchange in the week ended Feb. 16, the CFTC said in its weekly report. It was the first increase since the week ended Jan. 12.
China Processing Rises
China, the world’s second-biggest energy consumer, processed 29 percent more crude oil in January than a year earlier as the economic recovery spurred demand, the China Petroleum & Chemical Industry Association said.
Crude oil processing volume reached 30.14 million metric tons last month while oil-product output increased 24 percent to 18.59 million tons, the industry body said on its Web site.
Brent crude for April delivery rose as much as 75 cents, or 1 percent, to $78.94 a barrel on the London-based ICE Futures Europe exchange, and was at $78.27 at 11 a.m. London time. It climbed 0.5 percent to $78.19 on Feb. 19, the highest settlement price since Jan. 13.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
