BLBG:Oil Snaps Rally to Highest in a Month as U.S. Stockpiles Forecast to Rise
Oil snapped a rally to the highest price in more than a month yesterday as forecasts of rising crude supplies in the U.S. countered speculation Europe may contain its debt crisis and prevent a slump in demand.
Futures were little changed after advancing 2.3 percent yesterday before the release of Energy Department data today that may show supplies climbed 2 million barrels. An industry report showed they dropped a third week. German Chancellor Angela Merkel said yesterday that a European Union summit on Oct. 23 will be an “important step,” though not the final one, in solving the euro-area sovereign debt crisis.
“The market’s just looking for some sort of price direction,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who predicts prices will trade between $80 and $90 a barrel. “Traders aren’t willing to push prices higher given the weak economic outlook in the U.S. and what’s happening in Europe.”
Crude for November delivery was at $88.01 a barrel, down 33 cents, or 0.4 percent, in electronic trading on the New York Mercantile Exchange at 1:03 p.m. Sydney time. The contract yesterday rose $1.96 to $88.34, the highest close since Sept. 15. The more-actively traded December future slid 36 cents to $88.17. Prices are down 3.7 percent this year.
Brent oil for December settlement was at $110.92 a barrel, down 23 cents cents, on the London-based ICE Futures Europe exchange. The contract yesterday increased 0.9 percent to $111.15.
Crude Stockpiles
U.S. crude oil supplies fell 3.1 million barrels last week, the American Petroleum Institute said. The Energy Department report may show they climbed a second week, according to the median of 13 analyst estimates in a Bloomberg News survey.
Gasoline inventories dropped 1.6 million barrels, according to API data. They are forecast to slip 1.5 million barrels, the Bloomberg survey shows. Distillate stockpiles, a category that includes heating oil and diesel, decreased 2.2 million barrels compared with an estimate for a 1.5 million barrel decline.
The industry-funded API collects stockpile 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.
Saudi Arabia, the Organization of Petroleum Exporting Countries’ largest oil producer, increased output 1.6 percent in August from a month earlier, according to the Joint Organization Data Initiative. The kingdom pumped 9.76 million barrels a day, compared with 9.61 million barrels in July, statistics posted today on the initiative’s website show. The crude data includes condensates and excludes natural-gas liquids.
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 in Singapore at akwiatkowsk2@bloomberg.net
