BLBG: Oil Trades Near a Three-Week High After Decline in U.S. Crude Stockpiles
Oil rose to its highest level in three weeks in New York on climbing equity prices and signs that crude inventories are contracting in the U.S., the world’s largest oil user.
Crude traded near $78 a barrel as European stocks gained on stronger-than-estimated earnings at Apple Inc., Fiat SpA and Accor SA. The American Petroleum Institute showed that crude supplies fell last week, and analysts predict the Energy Department will report an inventory decline later today.
Crude oil for September delivery advanced as much as 70 cents, or 0.9 percent, to $78.28 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $78.15 at 12:06 p.m. in London. Brent crude oil for September settlement was up 66 cents at $76.88 a barrel on the London-based ICE Futures Europe exchange.
“Sentiment suddenly improved yesterday with U.S. equities,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “Overall product demand is quite healthy, up 5 percent in the U.S. from last year’s levels, but there is still a lot of uncertainty with what will happen in the U.S. and in China in the second half.”
The August contract expired in New York yesterday, up 90 cents at $77.44 a barrel, the highest daily settlement since June 28. The Stoxx Europe 600 Index rose 1.8 percent to 250.79 at 12:07 p.m. in London.
“We’ve got the U.S. reporting season under way at the moment, and it’s looking better than expected,” Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in a Bloomberg Television interview from Melbourne. “Oil’s been a bit choppy recently, tracking sideways. A lot of it depends on the macro data in the U.S.”
Storm Alert
Prices also gained yesterday after the National Hurricane Center said a weather system over Puerto Rico and the Dominican Republic has a 60 percent chance of becoming the second named tropical cyclone of the Atlantic hurricane season.
The Gulf of Mexico accounts for about 31 percent of U.S. oil output and 10 percent of its natural-gas production and is home to seven of the 10 busiest ports, according to the Energy Department. States along the Gulf are home to 43 percent of operable U.S. refining capacity.
U.S. crude stockpiles fell 241,000 barrels to 353.3 million last week, according to the American Petroleum Institute. The institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
The Energy Department may say supplies declined 1.2 million barrels, according to the median of 17 analysts surveyed by Bloomberg News before the release of its report at 10:30 a.m. today in Washington.
Forward Curve
The forward curve for oil, which compares prices for long- term deliveries to immediate supply, may flatten more as crude inventories begin to decline, according to analysts at Bank of America Merrill Lynch.
The Organization of Petroleum Exporting Countries has started to limit supplies, supporting prices for more immediate shipments of West Texas Intermediate and Brent crude, Francisco Blanch, Merrill’s head of commodity research, said in a report.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
