BLBG: Oil Holds Steady as U.S. Supplies Forecast to Rise a Third Week
By Grant Smith and Christian Schmollinger
Dec. 23 (Bloomberg) -- Crude oil traded little changed around $40 a barrel in New York before a government report that’s forecast to show U.S. supplies rose for a third week.
Crude stockpiles probably increased by 900,000 barrels in the week ended Dec. 19 from 321.3 million the week before, according to a Bloomberg survey before tomorrow’s Energy Department report. Last week the Organization of Petroleum Exporting Countries announced a record production cut in response to collapsing demand as a result of the economic slowdown.
“The sentiment is so negative right now as the focus is on the demand side,” said Eliane Tanner, an analyst at Credit Suisse Group in Zurich. “We think that the OPEC cut will help tighten the market.”
Crude for February delivery was at $39.86 a barrel, down 5 cents, on the New York Mercantile Exchange as of 10:20 a.m. London time. It earlier dropped 2.2 percent to $39.05 a barrel.
Oil prices, which have lost 73 percent from a record $147.27 on July 11, have declined 27 percent in December and 59 percent this year, snapping six years of gains.
U.S. supplies climbed in 11 of the past 12 weekly government reports as consumption waned. The Energy Department is scheduled to release its next report at 10:35 a.m. tomorrow in Washington.
Japanese crude imports fell 17 percent last month from a year earlier to 3.71 million barrels a day, according to finance ministry data. South Korea’s oil demand declined 12 percent, Korea National Oil Corp. said. Slowing Chinese growth prompted the nation’s central bank yesterday to cut interest rates for the fifth time in three months.
Oil May Rise
Oil prices may yet rebound to $93 a barrel, as technical indicators show that the current price slump has exhausted itself, according to fund manager Daniel Bruno Sanz.
Bloomberg’s CHART OF THE DAY shows that Demark Sequential Indicators applied to a weekly candle chart of crude prices for the past year indicate a signal to buy.
Brent crude oil for February settlement was at $41.56 a barrel, up 11 cents, on London’s ICE Futures Europe exchange at 10:26 a.m. The contract yesterday declined $2.55, or 5.8 percent, to settle at $41.45 a barrel.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Christian Schmollinger in Singapore at Christian.s@bloomberg.net
