BLBG: Oil Gains a Second Day as Industry Report Shows Supply Decline
By Ben Sharples and Ann Koh
June 9 (Bloomberg) -- Oil advanced for a second day as confidence among U.S. small businesses rose and an industry report showed a drop in the country’s crude supplies, bolstering optimism about the strength of the economic recovery.
Oil gained after the National Federation of Independent Business’s optimism index increased to 92.2 last month, the highest level since September 2008. The American Petroleum Institute said crude inventories dropped for a second week. An Energy Information Administration report today will probably show stockpiles fell 900,000 barrels, according to a Bloomberg News survey.
“There is some optimism with the macro data, especially in the U.S.,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone. “The last few weeks there’s been decent draws in the oil inventories in the U.S., and so the EIA data will be important to see if that trend continues.”
Crude oil for July delivery gained as much as 71 cents, or 1 percent, to $72.70 a barrel in electronic trading on the New York Mercantile Exchange, and was at $72.48 at 12:23 p.m. Singapore time. Yesterday, the contract rose 55 cents, or 0.8 percent, to settle at $71.99.
Oil climbed yesterday after Federal Reserve Chairman Ben S. Bernanke said the improvement in the world’s largest energy- consuming country is “moderate paced.” The Standard & Poor’s 500 Index gained 1.1 percent following its biggest two-day slump since March 2009.
Refinery Rates
The Energy Department cut its oil price forecast for 2010 to an average $78.75 a barrel from $82.18 in its monthly report yesterday. It reduced the outlook for oil consumption this year to 85.51 million barrels a day from 85.55 million last month.
The American Petroleum Institute said crude inventories dropped 4.54 million barrels, or 1.3 percent, last week.
U.S. refineries probably operated at 87.5 percent of capacity last week, unchanged from the previous week, according to the Bloomberg survey. Gasoline inventories fell 500,000 barrels from 219 million the week before.
“The driving season has kind of gone quiet but it’s still there,” John Vautrain, senior vice-president at energy consultants Purvin & Gertz Inc., said in a Bloomberg Television interview from Singapore. “When the economy is poor or prices are high, the extent of summer driving is depressed, but it seems not to be happening this year. We are getting a good boost.”
U.S. gasoline demand at the pump dropped 5.8 percent last week, the most in 10 months, according to a MasterCard Inc. report yesterday. Motorists bought an average 9.146 million barrels of motor fuel a day in the week ended June 4. The prior week, fuel consumption had surged to the highest level since August 2007 as drivers filled their tanks for the three-day holiday weekend, MasterCard said.
OPEC Forecasts
Brent crude for July delivery gained as much as 38 cents, or 0.5 percent, to $72.68 a barrel on the London-based ICE Futures Europe exchange, and was at $72.45 a barrel at 12:21 p.m. Singapore time. Yesterday, it rose 18 cents, or 0.3 percent, to settle at $72.30 a barrel.
Kuwaiti Oil Minister Ahmad al-Sabah said yesterday that prices will probably average $70 for the rest of this year and that he considers current levels “acceptable.” Kuwait is OPEC’s third-largest oil producer, after Saudi Arabia and Iran, based on Bloomberg estimates of May output.
The Organization of Petroleum Exporting Countries is scheduled to release its monthly report today, and the Paris- based International Energy Agency will publish its outlook tomorrow.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net
