BLBG: Oil Drops a Third Day on Forecast U.S. Supplies Rose Last Week
Crude oil fell for a third day before a report tomorrow that is forecast to show U.S. inventories rose from a 15-year high as the recession holds down fuel demand.
Crude oil stockpiles rose 1.25 million barrels in the week ended April 3 from 359.4 million the previous week, according to the median of 10 estimates by analysts before an Energy Department report tomorrow. European stocks pared their gains as financial and technology companies declined, removing support for crude prices.
“Demand globally is weak,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. “Inventory data definitely has to come down for prices to gain. It will be hard for prices to rise to $55 without support from a strong equity market.”
Crude oil for May delivery dropped as much as 93 cents, or 1.8 percent to $50.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $50.13 at 10:30 a.m. London time.
Oil has risen 13 percent this year and is down 66 percent from a record in July. Yesterday, crude dropped $1.46, or 2.8 percent, to settle at $51.05 a barrel.
The Dow Jones Stoxx 600 Index declined for a third day, dropping 1 percent to 183.1 at 9:54 a.m. in London.
“The near-term direction in prices is toward the $40 level,” said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. “The higher stockpiles have been a significant constraint on the price.”
Falling Gasoline Stockpiles
The Energy Department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.
Gasoline stockpiles probably dropped 1.5 million barrels from 216.8 million the prior week, according to the survey. Distillate fuels, a category that includes heating oil and diesel, probably fell 350,000 barrels from 144.2 million.
Refineries probably operated at 81.7 percent of capacity, little changed from the week before, according to the median of responses in the survey.
Brent crude oil for May settlement was at $51.83 a barrel, down 41 cents, on London’s ICE Futures Europe exchange at 10:28 a.m. London time. It dropped $1.23, or 2.3 percent, yesterday to $52.24 a barrel.
The Brent contract was more than $1.50 a barrel above Nymex’s May crude oil. The difference reached $1.19 yesterday, the most since Feb. 17. Brent oil is often priced at a discount to Nymex crude and traded lower for most of March.
