BS: Oil Little Changed as Recovery Hopes Dimmed by Supply Increase
By Grant Smith
April 22 (Bloomberg) -- Crude oil was little changed as hopes that the global recovery will spur fuel consumption were countered by signs that U.S. demand has yet to pick up.
Oil reversed earlier losses after an oil pipeline from Iraq, holder of the world’s third-largest crude-reserves, to Turkey was damaged in a bomb attack. A U.S. Energy Department report yesterday showed that crude inventories unexpectedly increased last week. The International Monetary Fund raised its forecast for global growth this year led by China.
“The IMF report is another sign that the recovery is broadening,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “But it was a fairly bearish oil data set, imports higher and demand lower. For the second quarter we expect range-trading, with $80 looking like a good floor.”
Crude oil for June delivery was at $83.87 a barrel, up 19 cents, in electronic trading on the New York Mercantile Exchange at 9:43 a.m. London time. Brent crude oil for June settlement was at $86.10 a barrel on the London-based ICE Futures Europe exchange, up 40 cents, at 9:31 a.m. London time.
The Energy Department’s report showed crude-oil stockpiles in the world’s largest energy consumer increased by 1.89 million barrels last week, compared with a 750,000-barrel decline forecast by analysts.
Oil pared earlier losses of 0.6 percent in New York as European equities advanced and the dollar snapped five days of gains against the euro, heightening the appeal of commodities for hedging against inflation.
Brent Premium
Brent traded at a premium of $2.23 a barrel to West Texas Intermediate futures, versus a discount of 71 cents a month ago.
The spread is linked to inventories at the delivery point for the U.S. benchmark crude West Texas Intermediate at Cushing, Oklahoma. These rose 5.8 percent to 34.1 million barrels, the highest since the week ended Jan. 8, the Energy Department report showed.
U.S. crude inventories nationwide are 5 percent above their seasonal norm after climbing to 355.9 million barrels, according to the Energy Department. The industry-funded American Petroleum Institute reported on April 20 a decrease of 741,000 barrels in stockpiles.
“We’re still yet to see a substantial recovery in the U.S. oil market fundamentals and that inventory report overnight was along those lines,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. “The market reacted to the DOE numbers, which were pretty soft across the board.”
Gasoline stockpiles rose 3.59 million barrels to 224.9 million last week, the DOE report showed. Distillate fuel inventories, including heating oil and diesel, gained 2.1 million barrels to 148.9 million, the highest in six weeks.
--With assistance from Yee Kai Pin in Singapore. Editors: John Buckley, Raj Rajendran
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
