BLBG: Crude Oil Falls as Increase in U.S. Supplies Spurs Concerns About Recovery
Oil fell in New York as the dollar recovered from its weakest level against the euro since April, while an increase in U.S. crude supplies reinforced concern that the recovery is not fast enough to whittle down excess supplies.
Futures declined as much as 1.1 percent after the Energy Department said yesterday stockpiles rose 970,000 barrels to 358.3 million last week. They were forecast to drop 1.75 million barrels, according to the median analyst estimates in a Bloomberg News survey. Gasoline supplies also rose and are now 15 percent higher than their five-year average and distillate stockpiles are now 23.3 percent above the five-year mean.
“We’re still sitting in a tight range,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “Yesterday’s data was moderately bearish, with rising imports and refinery processing rates still up. A slowdown in imports would really help reduce stockpiles.”
The November contract fell as much as 82 cents to $73.89 a barrel and traded at $74.18 in electronic trading on the New York Mercantile Exchange as of 11:57 a.m. London time. Brent crude oil for November settlement fell 83 cents to $77.12 a barrel on the London-based ICE Futures Europe exchange.
The dollar gained 0.5 percent to trade at 1.3337 against the euro, after sinking yesterday to $1.344, its weakest level since April 21. A stronger dollar reduces the appeal of commodities priced in the U.S. currency.
Analysts had forecast supplies would shrink after the eight-day shutdown of the Enbridge Energy Partners LP 6A pipeline that sends Canadian crude to the U.S. Midwest. Prices surged on speculation the closure would cause refineries in the Midwest to divert supply from Cushing, Oklahoma, the delivery hub for West Texas Intermediate oil traded in New York.
“A shortfall in U.S. supply from Canada after a major pipeline closure was more than met by rising imports in other regions,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in an e- mailed note today.
Imports Climb
Crude oil imports rose 295,000 barrels a day to 9.3 million. Overseas transfers of fuel products jumped 11 percent to 2.5 million barrels a day, the Energy Department said.
Total U.S. domestic oil product inventories reached 768.1 million barrels for the week ended Sept. 17, according to Bloomberg calculations. That’s the highest level since 1990 when the Energy Department began reporting weekly data. The figure doesn’t include ethanol stockpiles.
Total consumption of petroleum products averaged 19.2 million barrels a day last week, down 1.8 percent from the seven days ended Sept. 10, the Energy Department report showed.
Gasoline inventories rose 1.59 million barrels to 226.1 million, the highest level since March, the report showed. Stockpiles were forecast to drop 250,000 barrels, according to the median of 18 analyst estimates.
Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 347,000 barrels to 174.9 million. Inventories were forecast to increase 100,000 barrels.
“The builds aren’t good for the market,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “There just doesn’t seem to be the demand around at the moment. The major industries that use oil intensely in the U.S. are still sluggish.”
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
