BLBG: Oil Rises From Lowest in Eight Days Before U.S. Supply Report
Oil rose in New York from the lowest in eight days on speculation that the U.S. Energy Department will report a smaller increase in the country’s crude supplies than originally forecast.
Futures advanced as much as 0.8 percent after the American Petroleum Institute said yesterday inventories fell 558,000 barrels to 346 million barrels last week. The Energy Department will publish its numbers today. Before the release of the API data, analysts surveyed by Bloomberg News predicted the department will show supplies in the world’s biggest consumer of the commodity climbed 2 million barrels.
“The general drawdown in crude inventories reported yesterday was supportive,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “The API numbers can indicate the direction of the Energy Department data, but as a guide it’s not bulletproof.”
The March contract on the New York Mercantile Exchange gained as much as 81 cents to $87.75 a barrel in electronic trading, and was at $87.13 at 10:56 a.m. London time. Yesterday, it settled at $86.94, the lowest close since Jan. 27. Prices are 19 percent higher than a year ago. Brent crude for March settlement on the ICE Futures Europe exchange in London exceeded $100 for an eighth day, gaining 0.6 percent to $100.47.
Futures pared earlier gains as the dollar erased its losses against the euro, making commodities priced in the U.S. currency less appealing. The greenback was unchanged at $1.3625 at 10:54 a.m. London time, after sinking as much as 0.3 percent.
API Inventories
London Brent’s premium to West Texas Intermediate, the crude grade traded in New York, narrowed today to $12.89 a barrel as WTI’s gains outpaced the European benchmark. The price difference yesterday reached a record $12.98, according to data compiled by Bloomberg. The gap averaged 76 cents last year.
U.S. crude stockpiles fell by 1.5 million barrels in the Gulf Coast region, according to the API data yesterday. Supplies in the Petroleum Administration for Defense District 2, which consists of the Midwest states, dropped by 1.3 million. Inventories at the Cushing, Oklahoma, delivery point for New York oil futures declined from a record, dropping 927,000 to 37.5 million.
“The API report was encouraging,” Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania, said in a report today. “The only significant build in crude inventories was on the West Coast which, due to its geographical disparity, is often overlooked by the markets. All told, this was the most bullish report the API has released in weeks, but will the DOE corroborate?”
Energy Department
Crude imports dropped 11 percent last week to 8.6 million barrels, the API data showed. Oil-supply totals from the API and DOE have moved in the same direction 75 percent of the time in the past four years.
Gasoline supplies gained 3.2 million barrels to 239.7 million barrels, the API said. Motor fuel inventories probably increased 2.6 million barrels from 236.2 million a week earlier, according to the median of 16 analyst estimates before the government report today. The projected advance would leave stockpiles at the highest level since Feb. 26, 1993.
Distillate fuel levels, a category that includes heating oil and diesel, dropped 538,000 barrels to 160.7 million, the industry group reported. Supplies probably slipped 1 million barrels, or 0.6 percent, from 164.1 million, the inventory survey showed.
Investors are better off putting their money in energy company shares than oil futures because of the cost of “rolling” their positions from one monthly contract to the next, according to Petromatrix GmbH. The difference between months, currently $3.10 for the first two Nymex contracts, is known as contango.
Egypt Protests
Crude prices in New York surged 7 percent in the five days after protests against the government of Egyptian President Hosni Mubarak raised concerns that oil flows through the country might be disrupted.
Tens of thousands of Egyptians filled Cairo’s Tahrir Square yesterday as Vice President Omar Suleiman sought to convince demonstrators that the government is serious about moving toward democracy while stabilizing the economy.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
