BLBG: Oil Ends Five-Day Rally on Forecast for Gain in U.S. Supplies
By Yee Kai Pin and Ben Sharples
Feb. 23 (Bloomberg) -- Crude oil fell in New York, paring gains from a five-day rally, on speculation fuel supplies in the U.S. increased, signaling demand from the world’s biggest energy consumer may be slowing.
Oil slipped below $80 a barrel as analysts surveyed by Bloomberg News predicted U.S. crude inventories rose a fourth week last week and gasoline stockpiles increased further from the highest level since March 2008. Consumer confidence in the country probably cooled in February, declining for the first time since October, a separate survey showed.
“Given the fundamentals, they don’t justify crude prices above $80 a barrel,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The trend in gasoline stocks has got to levels that are a lot higher in the U.S. than can be explained by a seasonal stock increase, and it probably is another bearish signal for the oil price.”
Crude oil for April delivery dropped as much as 58 cents, or 0.7 percent, to $79.73 a barrel in electronic trading on the New York Mercantile Exchange. It was at $80.08 at 12:59 p.m. Singapore time. Yesterday, the March contract rose 0.4 percent to $80.16 before expiring at the close of floor trading.
Futures climbed 7.7 percent last week, the most since October, as the dollar pared gains against the euro, bolstering the investment appeal of commodities. Oil rose for five days through yesterday, the longest winning stretch since early January, even as supplies outpaced demand.
Crude Supplies
Commercially held crude stockpiles in the U.S. probably increased 1.9 million barrels in the week ended Feb. 19, from 334.5 million, according to the median of estimates from nine analysts polled by Bloomberg News. Gasoline inventories are expected to have added 1 million barrels from 232.1 million, a third weekly increase.
The Energy Department will release its Weekly Petroleum Status Report tomorrow at 10:30 a.m. in Washington.
The New York-based Conference Board may report today U.S. consumer confidence slipped this month to 55 from 55.9 in January, a Bloomberg News survey of economists showed. Confidence averaged 105 in the 12-month period before the recession began in December 2007. Consumer spending is the biggest part of the U.S. economy.0
“It’s possible for this market to go down to around $78,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “The only bullish news is the strike at Total’s plants. If it’s extended, the market will be supported.”
Total SA, the French refiner grappling with a nationwide strike, will meet unions today in a bid to end a dispute that threatens fuel shortages. Europe’s largest refiner has reported “sporadic” shortages at some gasoline filling stations.
Brent crude oil for April settlement fell as much as 56 cents, or 0.7 percent, to $78.05 a barrel on the London-based ICE Futures Europe exchange. It was at $78.37 at 12:58 p.m. Singapore time. Yesterday, the contract rose 0.5 percent to $78.61, the highest settlement since Jan. 12.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
