BLBG:Oil Rises From Three-Month Low as Supplies of Cushing Crude, Gasoline Drop
Oil rose from a three-month low in New York after an industry-funded report showed U.S. gasoline stockpiles dropped and crude inventories at Cushing declined the most since June in the world’s biggest consumer of the fuel.
Futures gained as much as 1.1 percent today. Gasoline supplies last week fell 676,000 barrels, the American Petroleum Institute said. An Energy Department report today will show they increased 950,000 barrels, according to a Bloomberg News survey. Crude inventories at Cushing, Oklahoma, the delivery point for the benchmark West Texas Intermediate grade, slid 1.5 million barrels, the API said.
“The API data set quite a bullish platform,” said Serene Lim, an energy and commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “It’s going to be a light day on the data front. We’ll just be watching out for the Energy Department inventory.”
Crude for June delivery rose as much as $1.09 to $98 a barrel in electronic trading on the New York Mercantile Exchange, and was at $97.70 at 1:52 p.m. Singapore time. The contract yesterday lost 46 cents, or 0.5 percent, to $96.91, the lowest since Feb. 22. Prices are up 41 percent the past year.
Brent oil for July settlement climbed 61 cents, or 0.6 percent, to $110.60 a barrel on the London-based ICE Futures Europe exchange. The contract yesterday declined 85 cents, or 0.8 percent, to $109.99.
Brent Premium
The European benchmark traded at a premium of $12.86 a barrel to U.S. futures, compared with $13.08 yesterday. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21 as unrest spread in the Middle East and North Africa and stockpiles climbed at Cushing. The spread averaged 76 cents last year.
Gasoline stockpiles in the U.S. fell to 208.8 million barrels, according to the API report. The decline in crude inventories at Cushing was the biggest since the week ended June 25. Supplies of distillate fuel, a category that includes heating oil and diesel, fell 2.8 million barrels.
Total U.S. crude stockpiles increased 2.67 million barrels to 369.9 million, the API report showed. The Energy Department report may show they climbed 1.7 million barrels, according to a Bloomberg News survey of analysts.
The API collects 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. Oil-supply totals from the API and the department have moved in the same direction 75 percent of the time over the past four years.
Libya Defection
Unrest in the Middle East, coupled with the impact from Japan’s worst nuclear crisis, will have a “significant” effect on long-term energy prices, Ray Eyles, chief executive officer of JPMorgan Chase & Co.’s commodities business in Asia, said in an interview in Singapore.
Libya’s top oil official, Shokri Ghanem, defected from the regime of Muammar Qaddafi, a spokesman for the rebel group at war with the country’s leader said yesterday.
Brent has climbed 17 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Algeria, Bahrain, Iran, Syria, Oman and Yemen. Syrian protesters kept up demonstrations following reports of the discovery of a mass grave containing the bodies of anti-government activists.
Crude in New York fell yesterday after reports showed U.S. housing starts dropped and industrial output stalled in April, stoking speculation fuel demand will falter.
Mississippi River
Mississippi River water pouring through 15 gates on Louisiana’s Morganza floodway has greatly reduced the risk of flooding to oil refineries that account for about 14 percent of U.S. capacity.
The diversion means the Mississippi has crested at about 17 feet in New Orleans, 2.5 feet below the forecast, and is expected to top out at 45 feet in Baton Rouge, below a record 47.5 that was expected by May 22, according to the U.S. Lower Mississippi River Forecast Center’s website.
Oil options volatility rose. Implied volatility for at-the- money options expiring in July, a measure of expected price swings in futures and a gauge of options prices, was 36.6 percent as of 2 p.m. in New York, up from 35.8 percent yesterday.
Options on oil for June delivery expired yesterday. The most-active contract for July was the $70 put, which gives investors the right to sell crude oil for delivery that month at $70 a barrel.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
