BLBG: Oil Trades Near Two-Month Low as Dollar Strengthens Versus Euro
By Grant Smith and Ann Koh
Dec. 15 (Bloomberg) -- Oil traded little changed near a two-month low in New York as the stronger dollar curtailed investor appetite for commodities.
Crude traded near $70 a barrel before a U.S. Energy Department report tomorrow forecast to show that oil inventories fell by 2 million barrels last week. Oil dropped for a ninth day yesterday, its longest losing streak since July 2001.
“Sentiment remains downbeat for most commodities,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “The stronger dollar is limiting the upside, but as we head into dull end-of-year trading the sell-off is losing steam, so we’ll likely consolidate around these levels.”
Crude oil for January delivery traded at $69.54 a barrel, up 3 cents, in electronic trading on the New York Mercantile Exchange at 9:28 a.m. in London. Earlier, the contract gained as much as 40 cents, or 0.6 percent, to $69.91.
Yesterday, the contract fell 36 cents to $69.51 in a ninth day of decline, the lowest settlement since Sept. 29. Prices have gained 56 percent this year.
Prices have fallen because of a “slow recovery” in demand in developed markets, according to a Goldman Sachs Group Inc. report yesterday. Oil has dropped 11 percent this month.
Prices are “very suitable,” between $70 and $80 a barrel, and it’s unlikely that the Organization of Petroleum Exporting Countries will change its output levels when it meets next week in Angola, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said yesterday in Kuwait City.
Oil Inventories
U.S. oil inventories probably fell 2 million barrels last week from 336.1 million barrels in the week ended Dec. 4, based on the median estimate of 10 analysts surveyed by Bloomberg News, all of whom predicted a decline. Supplies are 4.8 percent higher than a year ago.
Refinery utilization probably increased by 0.4 percentage point to 81.5 percent, the survey showed.
The dollar rose to a more than two-month high against the euro amid speculation improving economic data in the U.S. will spur the Federal Reserve to signal an exit from easing policies intended to combat the recession. The dollar traded at $1.4557 per euro as of 8:32 a.m. in London.
Brent crude oil for January settlement gained as much as 29 cents, or 0.4 percent, to $72.18 a barrel on the London-based ICE Futures Europe exchange.
To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
