BLBG: Oil Falls as Dollar Gains, Reducing Hedge Appeal of Commodities
Crude oil fell in New York as the dollar strengthened from a five-month low versus the euro, limiting investors’ need to hedge against inflation.
A government report later today will probably show U.S. crude-oil stockpiles dropped 1.5 million barrels last week, according to a Bloomberg survey. American gasoline consumption rose 2.2 percent last week from a year ago as cheaper fuel encouraged more driving during the Memorial Day holiday, a MasterCard Inc. report showed.
“We’re seeing the very first signs of the oversupply easing, but there’s still a large overhang out there,” said Andy Sommer, analyst at Elektrizitaets-Ges Laufenburg AG in Dietikon, Switzerland. “The fundamentals don’t support the recent rally; it’s driven by macro sentiment and dollar moves.”
Crude oil for July delivery fell as much as 88 cents, or 1.3 percent, to $67.83 a barrel on the New York Mercantile Exchange. It traded for $67.77 at 1:30 p.m. London time. Futures reached $69.05 a barrel yesterday, the highest since Nov. 5. Prices are up 52 percent this year.
The dollar snapped three days of losses against the euro. The U.S. currency was at $1.4226 a euro today after falling as low as $1.4339 earlier, the weakest since Dec. 29.
U.S. motorists bought an average 9.244 million barrels of gasoline a day in the week ended May 29, up from 9.043 million the prior year, MasterCard, the second-biggest credit-card company, said in a SpendingPulse report yesterday.
U.S. Stockpiles
U.S. crude-oil stockpiles for the week ended May 29 probably fell 1.5 million barrels from 363.1 million the previous week, according to the median of 15 estimates by analysts before an Energy Department report tomorrow. Inventories likely fell as refiners increased operations to meet demand during the summer driving season.
The industry-funded American Petroleum Institute said yesterday that U.S. crude oil stockpiles dropped 828,000 barrels to 363.9 million last week.
“The oil price wouldn’t be where it is if people didn’t have a view that the international economic situation has improved somewhat,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “The API data showed a moderate fall in supplies, and that’s helpful for prices.”
Stockpiles of gasoline probably rose 650,000 barrels from 203.4 million the prior week, according to the survey. Supplies of distillate fuel, a category that includes diesel and heating oil, increased 900,000 barrels from 148.4 million.
Brent crude for July was at $67.61 a barrel, 56 cents lower on London’s ICE Futures Europe exchange at 1:30 p.m. local time.
