BLBG: Oil Trades Near One-Month Low After U.S. Inventories Gained
By Christian Schmollinger and Ben Sharples
Nov. 13 (Bloomberg) -- Crude oil was little changed after falling to the lowest in a month in New York on concern that fuel demand has not recovered in the world’s biggest energy consumer.
Oil earlier extended yesterday’s 3 percent decline after an Energy Department report showed crude stockpiles rose a more- than-expected 1.76 million barrels last week. Refinery operating rates fell to 79.9 percent of capacity, the lowest in more than a year. Gasoline inventories rose 2.56 million barrels to 210.8 million, more than a forecast drop of 350,000 barrels.
“There is a lot of uncertainty as to what we can expect with the rate of recovery in Western oil demand, particularly the U.S.,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “There are sectors of the economy that remain weak.”
Oil for December delivery declined as much as 94 cents, or 1.2 percent, to $76 a barrel in electronic trading on the New York Mercantile Exchange. It was at $76.85 a barrel at 12:36 p.m. Singapore time. The contract yesterday fell $2.34 to $76.94.
Crude prices, which are up 72 percent this year, are poised to fall 0.7 percent this week.
“The U.S. numbers were incredibly bearish, especially the gasoline build,” said Clarence Chu, an options trader at Hudson Capital Energy in Singapore. “We’re seeing a continuation of the sell-off from yesterday.”
Refiners Reduce
U.S. refinery operating capacity fell 0.7 percentage point from the prior week, the report showed. It was the slowest pace since September 2008, when units were shut because of Hurricanes Gustav and Ike.
The decline in U.S. processing runs is in line with low rates in other developed countries. Japan’s refiners operated at 71 percent of capacity last week, an industry report said on Nov. 11. The two nations were responsible for about 29 percent of global demand last year, according to data from BP Plc.
Refiners’ profits have plummeted as crude prices climbed while gasoline and diesel levels failed to keep pace.
The margin from turning three barrels of crude into two barrels of gasoline and one barrel of heating oil was at $5.18 a barrel at 12:42 p.m. in Singapore. That’s down 59 percent from Aug. 14 as the peak gasoline demand season in the U.S. came to an end.
“Demand is just so anemic and the crack is so bad,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp in Tokyo. “It behooves refiners to keep runs low to try to support this market.”
U.S. fuel consumption dropped 4.3 percent to 18.3 million barrels a day, the lowest since June, according to the Energy Department report. Imports of crude oil increased 6.5 percent to 8.66 million barrels a day, the report showed. Fuel imports dropped 3.3 percent to 2.51 million.
Brent crude for December settlement fell as much as 44 cents, or 0.6 percent, to $75.58 a barrel on the London-based ICE Futures Europe exchange. It was at $76.02 a barrel at 12:25 p.m. Singapore time. The contract declined $1.93, or 2.5 percent, to end the session at $76.02 a barrel yesterday.
-- With assistance from Ann Koh in Singapore. Editors: Clyde Russell, Raj Rajendran.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net
