BLBG: Oil Falls After Industry Report Shows Increase in Fuel Supplies
By Yee Kai Pin
Sept. 23 (Bloomberg) -- Crude oil fell in New York after an industry report showed an increase in fuel supplies in the U.S., adding to signs demand has yet to recover in the world’s largest energy consumer.
Oil pared yesterday’s 2.6 percent gain after a report from the industry-funded American Petroleum Institute showed U.S. gasoline stockpiles climbed the most since January. The Energy Department report today is expected to show increases in the nation’s fuel inventories, according to a Bloomberg News survey.
“We’ve been expecting a demand recovery but we still haven’t seen much of a justification in the supply-demand fundamentals,” said Toby Hassall, a research analyst with CWA Global Markets Pty in Sydney. “The underlying supply-demand profile still suggests the market could be vulnerable to a pullback.”
Crude oil for November delivery declined as much as 63 cents, or 0.9 percent, to $71.13 a barrel in electronic trading on the New York Mercantile Exchange. It was at $71.61 at 1 p.m. in Singapore. The contract for October expired yesterday, settling at $71.55 a barrel, up $1.84.
Futures have gained 60 percent this year on speculation global fuel usage may recover as economies emerged from recession. Supplies held by the largest consumer nations have increased at the same time, fanning concern demand remains slow.
U.S. gasoline supplies increased 3.8 million barrels to 212.6 million barrels last week, according to the API. Crude oil stockpiles rose 276,000 barrels to 337.2 million last week, the highest in three weeks. Distillate inventories fell 1.9 million barrels to 168.4 million, the report showed.
High Inventories
“Overall inventory levels are high,” Hassall said. “The demand for petroleum products and crude hasn’t recovered enough at all really to start reducing stockpiles.”
The Energy Department is expected to report a 1.45 million- barrel increase in U.S. distillate fuel inventories in the week to Sept. 18, according to the median of estimates in a Bloomberg survey. Stockpiles, which include heating oil and diesel, were previously at 167.8 million barrels, the highest since January 1983.
Gasoline supplies probably gained 500,000 barrels from 207.7 million a week earlier, which would be a third weekly climb, the survey showed.
Commercially held crude oil inventories probably dropped 1.4 million barrels from 332.8 million, according to the median of responses. Thirteen of the analysts polled said stockpiles dropped and four forecast an increase.
The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. in Washington. Oil-supply totals from the API and DOE moved in the same direction 76 percent of the time over the past four years, according to data compiled by Bloomberg.
Investment Appeal
The dollar extended its losses, bolstering the investment appeal of commodities including oil and gold, amid speculation the Federal Reserve will keep interest rates low.
The dollar traded at $1.4809 per euro as of 1:15 p.m. in Tokyo from $1.4790 in New York yesterday, after earlier declining to $1.4842, the lowest level since Sept. 22, 2008.
“If we see further dollar weakness, that’s a constructive factor for all the commodity markets,” Hassall said. “I don’t see a lot of downside although I’m not sure if U.S. dollar weakness is going to be enough to break us out of this range.”
Brent crude oil for November settlement dropped as much as 63 cents, or 0.9 percent, to $69.90 a barrel on the London-based ICE Futures Europe exchange. The contract traded at $70.41 at 1 p.m. Singapore time.
