BS: Crude Oil Falls After U.S. Supplies Increase More Than Forecast
By Mark Shenk
April 7 (Bloomberg) -- Crude oil fell for the first time in seven days after a government report showed a bigger-than- forecast increase in U.S. inventories as imports surged.
“The fundamentals don’t support prices at these levels,” said Michael Fitzpatrick, vice president of energy at MF Global in New York. “Oil supplies increased even as refineries boosted operating rates, which shows there is no problem with supply.”
Crude oil for May delivery fell 90 cents, or 1 percent, to $85.94 a barrel at 11:02 a.m. on the New York Mercantile Exchange. Prices reached $87.09 yesterday, the highest level since Oct. 9, 2008. Futures are up 8.3 percent this year.
Gasoline supplies fell 2.5 million barrels to 222.4 million, the report showed. A 1 million-barrel decline was forecast. Gasoline blending components dropped 2.13 million barrels to 141.8 million.
Bearish Report
“The large build in crude oil stocks, the surprise distillate build, and the fact that almost all of the drop in gasoline stocks came from blending components make this a fundamentally bearish report,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston.
Refineries operated at 84.5 percent of capacity, the highest rate since the week ended Oct. 2.
Oil also dropped as the dollar gained against the euro. A stronger U.S. currency reduces the investment appeal of commodities. The greenback traded at $1.3344 per euro, up 0.4 percent from $1.3399 yesterday.
Europe’s economy stagnated in the fourth quarter as companies cut spending. Gross domestic product in the 16-nation euro region remained unchanged compared with the third quarter, when it rose 0.4 percent, the European Union’s statistics office in Luxembourg said today. It had previously reported a fourth- quarter expansion of 0.1 percent.
The European Union accounted for 18 percent of global oil demand in 2008, according to BP Plc, which publishes its BP Statistical Review of World Energy each June.
Brent crude oil for May settlement slipped 54 cents, or 0.6 percent, to $85.61 a barrel on the London-based ICE Futures Europe exchange.
--Editors: Joe Link, Dan Stets
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
