BLBG:Crude Oil Caps Biggest Monthly Drop Since May on U.S. Supplies
Oil capped its biggest monthly drop in New York since May after the government reported an unexpected increase in U.S. crude supplies.
Futures declined for the first time in five days as the Energy Department said oil stockpiles rose the most since April last week. Prices swung between gains and losses in intraday trading as gasoline supplies fell to a three-month low and on gains in gasoline futures and equities.
“Oil is at least slightly weaker and gasoline is stronger,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Today’s price action makes sense because you had tension between the crude and the gasoline. The positive tone in equities helped the overall market.”
Crude for October delivery slipped 9 cents to settle at $88.81 a barrel on the New York Mercantile Exchange. Prices decreased 7.2 percent in August, the third decline in four months, and are down 2.8 percent this year.
Brent oil for October settlement gained 83 cents, or 0.7 percent, to $114.85 a barrel, a four-week high, on the London- based ICE Futures Europe exchange. The European benchmark contract was at a premium of $26.04 to U.S. West Texas Intermediate futures, compared with a record close of $26.21 on Aug. 19. Brent lost 1.6 percent this month.
Oil Stockpiles Increase
U.S. oil supplies gained 5.28 million barrels, or 1.5 percent, to 357.1 million in the Energy Department report, the biggest weekly move since the seven days ended April 22. The median forecast of 13 analysts surveyed by Bloomberg was a decline of 500,000 barrels.
Gasoline inventories fell 2.8 million barrels to 208.6 million, the Energy Department report showed. Total products supplied, a measure of fuel demand, rose 1.7 percent to 19.6 million barrels a day, the first increase in three weeks.
“This is probably something that the bulls will sink their teeth into to make prices go higher,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida, who forecasts $95-a-barrel oil in the next three weeks.
The Organization of Petroleum Exporting Countries’ crude output in August rose 90,000 barrels, or 0.3 percent, to average 30.03 million barrels a day, a Bloomberg News survey of oil companies, producers and analysts showed. It was the highest level since 2008. Top producer Saudi Arabia pumped the most oil since at least 1989.
Equities Climb
The Dow Jones Industrial Average erased its loss for 2011 on jobs growth and factory orders reports.
The Commerce Department said orders placed with U.S. factories rose the most in four months, beating the median forecast of economists in a Bloomberg News survey. ADP Employer Services reported companies added 91,000 workers to payrolls, near the 100,000 median forecast by economists surveyed by Bloomberg News.
The Dow gained 0.5 percent to 11,613.53 at 4:04 p.m. in New York, and the Standard & Poor’s 500 Index increased 0.5 percent to 1,218.89.
“Crude is seeing some of the effects of the economic data,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York.
As Tropical Storm Katia strengthened in the Atlantic, forecasters said a large area of thunderstorms over Cuba and the western Caribbean could become a tropical system within days.
Tropical Storms
Katia, about 1,100 miles (1,765 kilometers) west of the southernmost of the Cape Verde Islands, has 65 mph winds and is speeding west-northwest at 21 mph, the National Hurricane Center in Miami said in an advisory at 11 a.m. New York time.
The Caribbean system has a 30 percent chance of becoming a tropical depression or tropical storm in the next 48 hours, the U.S. National Hurricane Center forecast in an advisory at about 1:35 p.m. Miami time. There is “some potential” for it to develop in the central or western Gulf of Mexico by week’s end.
States along the Gulf Coast are home to more U.S. refineries than any other region.
“The reason we’re supportive on gasoline is the idea that the storms may shut down some of the refineries,” said Phil Flynn, vice president of research at PFGBest in Chicago. “A lot of the traders are nervous that the second storm is going to gain steam and end up in the Gulf of Mexico.”
East Coast Refineries
Last week, Hurricane Irene shut in processing at refineries with total capacity of 1.28 million barrels a day in New Jersey, Pennsylvania and Delaware, according to the Energy Department.
Sunoco Inc. (SUN)’s 178,000-barrel-a-day facility at Marcus Hook, Pennsylvania, and its 335,000-barrel-a-day plant in Philadelphia are both operating at reduced rates, according to a situation report from the department’s Office of Electricity Delivery & Energy Reliability. ConocoPhillips (COP)’s 238,000-barrel-a-day Linden, New Jersey, refinery was restarting.
Gasoline for September delivery gained 3.62 cents, or 1.2 percent, to expire at $3.032 a gallon at the close of floor trading on the Nymex. The more-active October contract rose 3.48 cents, or 1.2 percent, to $2.8763.
Oil volume in electronic trading on the Nymex was 863,795 contracts as of 3:51 p.m. in New York. Volume totaled 665,471 contracts yesterday, 1.6 percent below the average of the past three months. Open interest was 1.49 million contracts.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
