BS: Oil Falls for First Day in Three on U.S. Supply Gain Forecast
Oct. 26 (Bloomberg) -- Oil declined for the first time in three days in New York before a report forecast to show that crude inventories increased last week in the U.S.
Futures fell as much as 0.8 percent as the dollar recovered from its lowest level in 15 years against the yen, undermining investors’ need to use commodities priced in the U.S. commodity for hedging against inflation. An Energy Department report tomorrow may show crude inventories rose 1.5 million barrels last week, according to a Bloomberg News survey of analysts.
“The very strong correlation with the dollar has been dominant the last few weeks,” said Thina Saltvedt, a Nordea Bank AB commodities analyst in Oslo. “Inventories are still high, and we do expect more negative news from the U.S. It’s a little too early to see $85.”
Oil for December delivery was at $82.25, down 27 cents, on the New York Mercantile Exchange at 12:55 p.m. London time, after falling to $81.84. Brent crude for December settlement traded down 9 cents at $83.44 a barrel on the ICE Futures Europe exchange in London.
The yen weakened to 81.24 against the dollar from 80.81 yen yesterday, when it reached 80.41. The dollar was 0.3 percent stronger against the euro at $1.3926, compared with $1.3982 earlier today.
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.
API Report
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.”
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.
--With assistance from Ann Koh in Singapore. Editors: John Buckley, Rob Verdonck
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
