BS: Oil Is Little Changed Amid Concern U.S. Fuel Demand has Dropped
By Ben Sharples and Yee Kai Pin
March 19 (Bloomberg) -- Crude oil was little changed and poised for a weekly gain amid concern fuel consumption in the U.S., the world’s biggest energy consumer, declined and as the dollar’s recent strength damped investor demand for commodities.
Oil fell below $82 a barrel yesterday after the dollar advanced against the euro on speculation Greece may fail to secure financial assistance from the European Union. Commercially held U.S. crude inventories rose last week to the highest since August, the Energy Department said March 17.
“There are some further concerns about the prospects for Greece so the euro fell against the U.S. dollar,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. The Energy Department data also showed “a little bit of softness in the product demand.”
Crude oil for April delivery was at $82.03 a barrel in electronic trading on the New York Mercantile Exchange, down 17 cents, at 1:59 p.m. Singapore time. Yesterday, the contract lost 0.9 percent to settle at $82.20, ending a two-day climb. Futures are set for a 1 percent gain this week.
The dollar was little changed against the 16-nation euro after rising for a second day to $1.3608 yesterday in New York. Greek Prime Minister George Papandreou said he may turn to the International Monetary Fund to overcome Greece’s debt crisis unless EU leaders agree to set up a lending facility at a summit next week.
U.S. crude stockpiles increased for a seventh week to 344 million barrels, 5 percent above the five-year average, the Energy Department said. Fuel demand declined 4.2 percent to 18.8 million barrels a day, the biggest one-week drop since November.
Discount Rate
The U.S. Federal Reserve may increase its discount rate, charged on direct loans to banks, before the next meeting of the Federal Open Market Committee on April 28, economists said. This could send the dollar higher, damping the investment appeal of commodities.
“There’s some rumor that the U.S. discount rate could be higher,” said Yusuke Seta, a commodity derivatives broker at Newedge in Tokyo. “There is no bullish news so next week it’s likely to be down.”
Seventeen of 38 analysts and traders, or 45 percent, said oil will drop through March 26. Twelve respondents, or 32 percent, predicted that futures will climb and nine said there will be little change in prices. Last week, 46 percent of respondents predicted there would be a decline in futures.
Brent crude for May settlement on the London-based ICE Futures Europe exchange was at $81.30 a barrel, down 18 cents, at 1:48 p.m. Singapore time. The contract fell as much as 0.5 percent to $81.04.
--Editor: Clyde Russell, Raj Rajendran.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
