BLBG: Oil Falls Near Lowest in a Week on Strong Dollar, Higher U.S. Inventories
Crude oil traded near $76 a barrel as growing U.S. inventories reinforced doubts about the economic recovery, while equity markets fell and a stronger dollar reduced oil’s investment appeal.
The U.S. Energy Department reported crude stockpiles rose more than analysts expected. The International Energy Agency, an adviser to oil-consuming nations, said in a report yesterday that growth in world oil demand will slow in the next five years as the pace of Chinese consumption moderates.
“The supply situation in the oil market remains very relaxed as crude inventories are increasing in defiance of their normal seasonal pattern,” said Eugen Weinberg, head of commodity research at Commerzbank AG in Frankfurt.
Crude for August delivery traded at $76.29 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchange at 11:27 a.m. in London. It earlier fell as much as 80 cents, or 1.1 percent, to $75.55 a barrel.
Brent crude oil for August delivery was down 2 cents at $76.25 a barrel on the London-based ICE Futures Europe exchange.
Yesterday crude dropped to $75.17, its lowest since June 15, after U.S. crude stockpiles rose 2.02 million barrels to 365.1 million in the week ended June 18. Supplies were forecast to drop 800,000 barrels, according to analysts surveyed by Bloomberg News.
Imports of crude climbed 4.3 percent to 10.1 million barrels a day, the highest level since the week ended Jan. 2, 2009, the Energy Department report showed. Fuel imports surged 10 percent to 2.32 million barrels a day.
Gasoline Stockpiles Fall
Gasoline supplies fell 762,000 barrels to 217.6 million last week. An 180,000-barrel drop was forecast, according to the median of 15 responses in the survey.
Refineries operated at 89.4 percent of capacity, up 1.5 percentage points from the prior week and the highest level since April, the report showed.
The dollar advanced against the euro to as much as $1.2262 against the common European currency from $1.2311 yesterday, and traded at $1.2287 at 11:31 a.m. London time. The Stoxx Europe 600 Index fell as much as 1.1 percent.
The IEA estimates that the rate of annual demand growth will shrink each year between now and 2015. Consumption will climb 1 percent to 91.93 million barrels a day in 2015, down from 1.5 percent growth in 2010, according to the Paris-based agency’s Medium-Term Oil and Gas Markets 2010 report.
“Sentiment is still pretty weak,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “On the demand front, it’s still negative and still very uncertain.”
China Demand Outlook
Chinese oil demand is expected to reach 11.63 million barrels a day by 2015, up from 9.16 million this year, according to the IEA data. The pace is slowing, with consumption rising 4.1 percent in 2015, compared with 7.6 percent this year, according to the report.
The rate of consumption decline in developed economies is accelerating. Total demand from the 30 industrialized countries that belong to the Organization for Economic Cooperation and Development will drop 0.9 percent in 2015 compared with a 0.1 percent fall in 2010, the agency estimates.
