BLBG: Oil Is Steady on Signs Impact of Chinese Package May Be Delayed
By Mark Shenk
Nov. 10 (Bloomberg) -- Crude oil was little changed amid speculation that the impact of a Chinese stimulus package on raw- material demand will be delayed.
Oil rose more than $4 a barrel earlier on the 4 trillion- yuan ($586 billion) plan from China, the world's second-biggest oil consumer. The Organization of Petroleum Exporting Countries, the International Energy Agency and the U.S. Energy Department all have cut forecasts for fuel demand over the past month.
``We won't be feeling the impact of the Chinese stimulus package until well into next year,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York.
Crude oil for December delivery rose 14 cents to $61.18 a barrel at 12:04 p.m. on the New York Mercantile Exchange. Prices, which have tumbled 58 percent since reaching a record $147.27 on July 11, are down 37 percent from a year ago.
``This is more about money flow and momentum than anything else,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``We can't maintain rallies even when the fundamentals support them. Last year we had the opposite situation as prices went higher no matter what was in the news.''
Energy futures and stock markets both moved higher in early trading. U.S. stocks dropped, erasing earlier gains, as analysts predicted Goldman Sachs Group Inc. will post its first loss and Google Inc.'s sales will be hurt by the slowing economy.
The Standard & Poor's 500 Index declined 6.91 points, or 0.7 percent, to 924.08. The Dow Jones Industrial Average fell 21.90, or 0.2 percent, to 8,921.91.
`Clear the Decks'
``This shows that that there are still hedge funds that need to clear the decks and will use any rally as an opportunity to sell,'' said Bill O'Grady, chief markets strategist at Confluence Investment Management in St. Louis. ``The Chinese news is actually a big deal. This just proves that that there is still more selling to go.''
Oil prices fell 10 percent last week as equities dropped, U.S. fuel stockpiles rose more than expected and the nation's unemployment rate climbed to a 14-year high.
``There's a tremendous short-term focus in all of these markets,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York. ``There's still an impulse to sell all rallies because of a list of bearish indicators.''
The International Monetary Fund is forecasting that the economies of the U.S., Japan, Europe and the U.K. will all contract next year in their first simultaneous recession since World War II.
Brent crude oil for December settlement rose 27 cents, or 0.5 percent, to $57.62 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
