BLBG: Oil Rises From Three-Week Low on Forecast for U.S. Supply Drop
By Grant Smith and Yee Kai Pin
April 20 (Bloomberg) -- Oil rose from a three-week low on speculation a report tomorrow will show crude stockpiles declined for a second week in the U.S., the world’s biggest energy consumer.
Crude gained with European and Asian equities as concerns eased about further regulatory scrutiny of banks. Oil futures fell yesterday after the Securities and Exchange Commission’s decision to sue Goldman Sachs Group Inc. deterred investors from riskier assets. U.S. inventories of crude-oil probably fell 600,000 barrels in the U.S. last week as imports slowed, a Bloomberg News survey showed.
“Stronger equities, combined with tentative hopes that the demand recovery will materialize, are helping stabilize the market today,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “It seems the disruption to jet- fuel demand may be short-lived. Prices have returned to a sideways range with $82 at the bottom and a top around $87.”
Crude oil for May delivery rose as much as $1.09, or 1.3 percent, to $82.54 a barrel on the New York Mercantile Exchange. It was at $82.50 at 9:33 a.m. London time. Brent crude oil for June settlement was at $85.32 on the London-based ICE Futures Europe exchange.
The May future on the Nymex expires today. The more- actively traded June contract climbed 91 cents to $84.04. Futures have gained 4 percent this year.
Icelandic Volcano
Yesterday, oil in New York dropped 2.2 percent to $81.45, the lowest settlement since March 26, amid air-traffic disruptions caused by a volcanic eruption under Iceland’s Eyjafjallajökull glacier. Global jet-fuel demand may be cut by 1.2 million barrels a day as a result, according to Societe Generale SA. Some European airspace will open to flights today.
Oil has fallen in eight of the nine sessions since April 6, when the market reached an 18-month high of $87.06. Prices rose on April 14 after the Energy Department reported an unexpected 2.2 million-barrel decline in U.S. crude oil inventories, the first drawdown in 11 weeks.
Tomorrow’s Energy Department report will probably show a second decline as refiners increased operating rates for a fifth week to meet summer gasoline demand, according to the Bloomberg survey. Stockpiles of the motor fuel probably rose 140,000 barrels, based on the median estimate from 11 analysts polled.
“The market ran a little hard on the downside,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “Oil has come back quite a bit” and people are reconsidering some of the impact they were expecting from the action against Goldman, he said.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net
