BLBG: Oil Falls a Third Day on Stronger Dollar, Rising U.S. Supplies
By Grant Smith
May 13 (Bloomberg) -- Oil fell for a third day in New York as the strengthening dollar curbed investors’ demand for alternative investments, and as U.S. crude inventories grew.
The Energy Department said crude inventories rose 1.95 million barrels last week to 362.5 million, the highest in almost a year. It was the 14th increase in 15 weeks. New York futures are trading at the biggest discount to London contracts since February 2009 after supplies at the Cushing, Oklahoma, delivery point jumped to a record.
“The key driver for sentiment is uncertainty regarding growth in Europe and possible implications for world growth,” said Christophe Barret, an analyst with Credit Agricole CIB in London. “Crude stocks are pretty high. A range around $70 would be reasonable, given the economic outlook.”
Crude oil for June delivery declined as much as 74 cents, or 1 percent, to $74.91 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.09 as of 9:51 a.m. London time. Brent crude oil for June settlement gained 14 cents to $81.34 on the London-based ICE Futures Europe exchange.
The June Brent contract, expiring tomorrow, was about $6 a barrel higher than its New York equivalent. The more actively traded July Brent future was up 7 cents today at $82.47.
The U.S. currency advanced to $1.2595 per euro as of 9:53 a.m. London time, from $1.2614 in New York last night. A stronger dollar makes commodities like crude appear more expensive to investors using other currencies, and also less valuable for protecting against inflation.
Stockpiles at Cushing increased for an eighth week, gaining 784,000 barrels to 37 million, the Energy Department said. That’s the highest level since the Energy Department began keeping records at the storage center in April 2004.
“The big stockpiles at Cushing continue to get bigger,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone today. “The fundamentals don’t look particularly good. The IEA has also trimmed their forecast for oil demand, and while that won’t in itself play with the market too much, it may temper some of the expectations of a recovery.”
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net
