BLBG: Oil Declines as Forecast Gain in U.S. Inventories Signals Slowing Demand
Oil declined in New York on speculation slowing fuel demand will cause inventories to rise in the U.S., the world’s largest crude consumer.
Futures dropped as much as 0.6 percent as the dollar advanced, limiting the investment appeal of commodities. An Energy Department report tomorrow may show crude inventories rose 1.5 million barrels last week, according to a Bloomberg News analyst survey.
“Inventories are still high, and we do expect more negative news from the U.S.,” said Thina Saltvedt, a Nordea Bank AB commodities analyst in Oslo. “We haven’t had any cold spells yet, so until then it’s a little too early to see $85.”
Oil for December delivery fell as much as 68 cents to $81.84 a barrel in electronic trading on the New York Mercantile Exchange and was at $81.96 at 10:09 a.m. London time. Brent crude for December settlement traded at $83.11 a barrel, down 43 cents, on the ICE Futures Europe exchange in London.
U.S. gasoline supplies probably climbed by 625,000 barrels last week, according to the estimates in the Bloomberg survey. Supplies of distillate fuel probably decreased for a fifth week as distributors took deliveries before winter and exports to Europe increased, the Bloomberg News survey shows.
The department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute will release its own weekly inventory report at 4:30 p.m. today.
“If you look at the inventory expectations, crude supplies should climb, so fundamentally there’s not much support,” said Serene Lim, an energy and commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The market will be determined by the price moves in the dollar.”
Dollar Gains Strength
The Dollar Index, which tracks the greenback against six major currencies, rose 0.1 percent. The U.S. currency gained as much as 0.5 percent to 81.21 yen and 0.4 percent against the euro at $1.3908.
Workers at three French oil refineries voted to return to work as a contested pension bill neared parliamentary approval and the government warned that fuel shortages were hurting the economy. The nation’s eight remaining active plants are either on strike or shut because of a lack of crude.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
