BLBG: Oil Trades Near One-Week Low as Rising Stockpiles Signal Slowing Demand
Oil traded near the lowest in a week in New York as rising U.S. inventories signaled slowing demand in the world’s biggest crude consumer.
Futures earlier dropped as much as 0.5 percent after U.S. Treasury Secretary Timothy Geithner said oil prices are an obstacle to economic growth. A U.S. government report today may show crude stockpiles in the country climbed even as gasoline supplies declined.
“People are concerned about high oil prices so I don’t think it’s very easy for oil to go much higher,” said Ken Hasegawa, a commodity-derivative sales manager at Newedge Group in Tokyo, a broker. “Gasoline inventories have decreased in the last few months but there’s still a lot of inventory of crude oil in the U.S. and all over the world.”
Crude for June delivery was at $112.29 a barrel, up 8 cents, in electronic trading on the New York Mercantile Exchange at 1:35 p.m. Singapore time. The contract fell as much as 50 cents. Yesterday, it slid 7 cents to $112.21, the lowest settlement since April 20.
Futures have gained 36 percent in the past year. Oil’s rally has created “new headwinds” against economic growth, Geithner told the Council on Foreign Relations in New York yesterday, even as a Conference Board index showed consumer confidence increased more than forecast in April.
Brent crude for June settlement on the London-based ICE Futures Europe exchange was at $124.13 a barrel, down 1 cent. Yesterday, the contract added 0.4 percent to $124.14, the highest since April 8.
Oil Supplies
U.S. crude inventories probably increased last week against a drop in gasoline supplies, a Bloomberg News survey showed before an Energy Department report today.
Crude stockpiles climbed 1.7 million barrels from 357 million in the week ended April 22, according to the median estimate of 13 analysts polled. Gasoline stockpiles are expected to have decreased 1 million barrels from 208 million.
Yesterday, the industry-funded American Petroleum Institute said gasoline inventories fell for a 10th week, the longest losing streak since August 1994, and crude stockpiles gained the most in four weeks.
The Energy Department will release its Weekly Petroleum Status Report at 10:30 a.m. today in Washington.
U.S. Consumers
“Consumers are becoming more confident and spending is starting to grow more robustly but the housing market is still very weak,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “That’s likely to be a big headwind to growth ahead, and as a result, a bit of a headwind to demand for crude.”
Brent has advanced 22 percent since protests against Libyan leader Muammar Qaddafi began Feb. 15, cutting the country’s oil production and heightening speculation Middle East exports will be disrupted. The conflict in the North African nation is the bloodiest in a series of uprisings that has unseated the presidents of Tunisia and Egypt.
Security forces in Syria strafed the streets of the southern city of Daraa with machine guns and the government cut off water supplies as the death toll from an April 25 crackdown rose to 25, a witness said.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
