BLBG: Crude Oil Falls to Near $72 in New York as Dollar Pares Loss
By Grant Smith
Sept. 17 (Bloomberg) -- Oil fell and traded around $72 a barrel in New York as the U.S. dollar pared losses, limiting the appeal of crude in hedging against inflation.
U.S. stockpiles of distillate fuel, which includes diesel and heating oil, climbed 2.24 by million barrels to 167.8 million, the highest since January 1983, the Energy Department reported yesterday. The increase in the category, which includes diesel and heating oil, came as crude inventories fell by 4.73 million barrels, the report showed yesterday, more than the 2.5 million-barrel decline forecast by in a Bloomberg News survey.
“It’s still going to be hard for crude to pass $75.” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “Distillates are a bearish picture. And on an historic basis, the correlation between oil and the dollar is still high.”
Crude oil for October delivery fell as much as 64 cents, or 0.9 percent, to $71.87 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $72.09 as of 1:50 p.m. London time. Yesterday, the contract rose $1.58, or 2.2 percent, to $72.51. Futures are up 63 percent this year.
The dollar strengthened from near the weakest level versus the euro in a year. The U.S. currency was at $1.4711 per euro as of 1:27 p.m. London time, compared with $1.4768 earlier, the weakest since Sept. 25, 2008.
Crude stockpiles in the U.S., the biggest energy-consuming nation, fell to 332.8 million barrels, the Energy Department said. Gasoline inventories rose 547,000 barrels to 207.7 million last week, the department said.
Struggling Refineries
Refineries operated at a three-week low of 86.9 percent of capacity in the week ended Sept. 11, down 0.3 percentage point from the previous week, according to the department.
Refiner’s profit margins have collapsed in the past month on expectations of falling fuel demand with the end of the peak summer demand season for gasoline. The profit from turning three barrels of crude into two barrels of gasoline and one barrel of heating oil has dropped to $4.72 a barrel today from $13.46 a month earlier.
“The crack spread and refining margins and the distillate inventories are all troubling,” said Victor Shum, a senior principal at consultant Purvin & Gertz Inc. in Singapore. “It points to the fact that U.S. refiners are likely to cut runs in the coming weeks.”
Brent crude oil for November settlement was at $71.17 a barrel, down 50 cents, on the London-based ICE Futures Europe exchange at 1:33 p.m. London time. Yesterday, the contract jumped 2.6 percent to $71.67, the highest since Aug. 28.
