BLBG: Oil Rises a Third Day as Industry Report Shows Stockpile Drop
By Ben Sharples and Christian Schmollinger
Nov. 18 (Bloomberg) -- Oil advanced for a third day in New York after an industry report showed a decline in crude stockpiles in the U.S., the largest energy consumer.
The American Petroleum Institute said yesterday crude inventories fell by 4.37 million barrels last week to 333.1 million. The U.S. Energy Department will release its weekly supply report today in Washington. It is expected to say overall fuel supplies declined. Imports and output were disrupted last week as Hurricane Ida passed through the Gulf of Mexico.
“If we see a drop of that magnitude in the DOE report, that would be perceived as fairly bullish for the market,” said Toby Hassall, a research analyst with CWA Global Markets in Sydney. “You have to take into account what’s been going on in the Gulf with regards to shut-ins after the storm activity we’ve seen there.”
Crude oil for December delivery rose as much as 71 cents, or 0.9 percent, to $79.85 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.44 at 12:04 p.m. in Singapore. Yesterday, the contract rose 24 cents to settle at $79.14. Prices have gained 78 percent this year.
Prices gained this week after a more-than-forecast jump in U.S. retail sales increased optimism that prospects for the global economy were improving. U.S. stock markets gained for a third day yesterday. Asian equity climbed as well.
“We’re seeing the rally in crude, the rally in equities and the rally in gold all highly correlated over the past six months,” said Alan Plaugmann, head of futures at Saxo Bank in a Bloomberg Television interview.
Ida’s Effects
Energy producers in the U.S. idled about 43 percent of oil output in the Gulf of Mexico on Nov. 10 as Ida made landfall, according to the Interior Department’s Minerals Management Service.
The Louisiana Offshore Oil Port, used by tankers too large to dock at U.S. harbors, was closed for 3 1/2 days because of rough seas and high winds, said Barb Hestermann, a spokeswoman for the oil terminal yesterday.
“The API numbers are the biggest driver today,” said Clarence Chu, an options trader at Hudson Capital Energy in Singapore. “It was a surprise and the market popped once the numbers were out.”
The Energy Department report will probably show stockpiles of crude oil climbed 300,000 barrels, according to the 17 analysts who provided crude estimates. Those looking for an inventory drop focused on disruptions caused by Hurricane Ida.
Supplies of distillates, a category that includes heating oil and diesel, fell 850,000 barrels from 167.4 million the prior week, according to the survey.
Inventory Report
Analysts were split over whether gasoline stockpiles rose or fell last week. Gasoline inventories probably declined 25,000 barrels from 210.8 million the week before, the survey showed.
API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
“We are seeing strong demand growth out of the emerging economies,” Hassall said. China last week reported October net oil imports of 18.98 million tons, the second-highest volume on record.
There are also some signs that demand is being maintained in the U.S.
Gasoline consumption there rose for the first time in three weeks, increasing by 1.4 percent, according to a report by MasterCard Inc. Motorists bought an average 9.22 million barrels a day in the week ended Nov. 13, MasterCard, the second-biggest credit-card company, said in its SpendingPulse report yesterday. It was the first gain since Oct. 23.
Oil declined as much as 1 percent yesterday as the dollar rose against the euro. The U.S. currency traded at $1.4874 per euro at 12:05 p.m. Singapore time, from $1.4876 yesterday.
“A mixed day in the markets and day that saw oil decoupling from the strong bond it has for the U.S. dollar,” Dominick Chirichella, an analyst with the Energy Management Institute said in a note to clients today.
Brent crude oil for January settlement rose as much as 73 cents, or 0.9 percent, to $79.70 a barrel on the London-based ICE Futures Europe exchange. It was at $79.30 a barrel at 12:02 p.m. Singapore time. The contract climbed 21 cents, or 0.3 percent, to $78.97 a barrel yesterday.
To contact the reporter on this story: Ben Sharples in Canberra at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
