BS: Crude Oil Snaps Five Days of Gains as Investors Lock in Profits
By Ann Koh and James Paton
Dec. 30 (Bloomberg) -- Crude oil snapped five days of gains as investors sold contracts to take profit after a U.S. industry report showed crude stockpiles rose and the dollar traded near a two-month high against the yen.
Inventories of crude oil rose 1.73 million barrels last week to 330.5 million, the American Petroleum Institute said yesterday, before an Energy Department report today. The dollar is forecast to strengthen against the euro for a third day, reducing the appeal of commodities as an inflation hedge.
“After strong gains over the past year, there’s a propensity to lock in profits and reposition for 2010,” said Mark Pervan, a senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “Now, I think you’re going to see sideways movement.”
Crude oil for February delivery fell as much as 35 cents, or 0.4 percent, to $78.52 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $78.78 at 11:53 a.m. Singapore time. Futures, which have tripled in the past decade, closed yesterday at the highest settlement since Nov. 18.
Oil had climbed 8.8 percent in the past five days and surged 77 percent this year on signs of a global economic recovery. U.S. consumer confidence improved in December for a second month, pointing to an economy that will keep expanding into 2010. The dollar bought 92.14 yen at 10:26 a.m. in Tokyo from 92 in New York yesterday, the highest level since Oct. 27.
API Report
“It seems the demand outlook is the very big swing variable in the oil market at the moment,” said Ben Westmore, a minerals and energy economist at National Australia Bank in a Bloomberg Television interview. “If you couple that with the fact that you have a large supply overhang, it’s difficult to see the oil price moving higher in a trend sense.”
Refinery utilization rates fell to 78.2 percent in the week ended Dec. 25 from 78.4 percent a week earlier, according to the industry-funded API.
“There is a big disconnect in the market balance in the oil market at the moment, and that needs to be addressed before we get any further price momentum upwards, in a trend sense,” Westmore said.
Gasoline Demand
U.S. gasoline demand fell the most in five months as snowstorms in New England and the Central Atlantic states reduced demand, MasterCard Inc. said.
Motorists bought 9.25 million barrels of gasoline a day in the week ended Dec. 25, the lowest in five weeks, the second- biggest credit-card company, said in its report yesterday. Consumption was down 3.3 percent from the previous week, the biggest decline since July 10.
A “major Arctic wave” heading for the U.S. will likely cause millions of households to boost heating fuel use this winter, according to State College, Pennsylvania-based AccuWeather.com.
Heating oil for January delivery rose as much as 0.67 cent, or 0.3 percent, to $2.1095 a barrel on the Nymex.
Brent crude for February settlement fell as much as 11 cents, or 0.1 percent, to $77.53 a barrel on London’s ICE Futures Europe exchange. It was at $77.64 at 11:57 a.m. Singapore time. Yesterday it increased 32 cents, or 0.4 percent, to $77.64 a barrel.
--Editors: Jane Lee, Alex Devine.
To contact the reporters on this story: Ann Koh in Singapore at +65-6212-1509 or akoh15@bloomberg.net; James Paton in Sydney +61-2-9777-8698 or jpaton4@bloomberg.net.
