BLBG: Crude Oil Is Steady After Gaining on Higher European Equities
By Grant Smith and Yee Kai Pin
Jan. 29 (Bloomberg) -- Crude oil traded little changed after rising for the first time in four days on advancing equity markets in Europe.
The U.S. Senate yesterday unanimously passed sanctions on foreign companies that sell refined petroleum to Iran, holder of the world’s second-largest crude reserves. Oil has lost 6.7 in January, the first monthly decline since July, on concern the U.S. government will limit trading by banks and that China will take further steps to cool its economy.
“We’re seeing some stabilization as European equities are mostly positive and the dollar is a little weaker,” said Eugen Weinberg, commodity strategist with Commerzbank AG in Frankfurt. “Fundamentals are not positive at the moment. The demand side is recovering but definitely not as strong as expected.”
Crude oil for March delivery traded down 10 cents at $73.54 a barrel in electronic trading on the New York Mercantile Exchange at 12:41 p.m. London time. Earlier, it gained as much as 45 cents, or 0.6 percent, to $74.09 a barrel.
The dollar was little changed at $1.3961 against the euro after earlier reaching $1.3913, the highest since July 14.
European stocks advanced, with the Dow Jones Stoxx 600 Index trimming its third straight weekly drop, as Infineon Technologies AG raised its earnings outlook and Bayerische Motoren Werke AG said it may have a pretax profit.
The U.S., its European allies and UN inspectors suspect Iran is trying to develop the means to build a nuclear weapon under the guise of a civilian atomic-energy program. The U.S. says Iranian leaders are rebuffing efforts to settle the dispute.
‘Biggest Risk’
“By far the biggest risk for the market is something happening to Iran,” said Commerzbank’s Weinberg. “Should prices recover, you’ll start to see more talk about this in the market. But it’s not going to lead to a scarcity of oil with capacity in the other OPEC countries.”
Oil may fall next week as U.S. supplies increased and fuel demand lags behind year-earlier levels, a Bloomberg News survey showed.
Eighteen of 38 analysts and traders polled, or 47 percent, said prices will decline through Feb. 5. Ten respondents, or 26 percent, forecast an increase and 10 said futures will be little changed. Last week, 43 percent of respondents predicted a drop.
U.S. crude oil and gasoline inventories are more than 4 percent over the five-year average level, according to Energy Department data released on Jan. 27. Distillate fuel stockpiles, including heating oil and diesel, climbed to 157.5 million barrels last week, 16.2 percent above the average.
Brent crude oil for March settlement was at $72.01 a barrel on the London-based ICE Futures Europe exchange, down 12 cents at 12:42 p.m. London time. Yesterday, the contract slipped 11 cents to $72.13, the lowest settlement since Dec. 15.
“The optimism that led into 2010 has dried up very quickly,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “Economies have been running off stimulus packages, not off genuine demand.”
