BLBG:Oil Drops From Three-Month High on U.S. Stockpiles, European Debt Yields
Oil dropped from the highest level in more than three months after U.S. crude stockpiles increased and a surge in Italian bond yields stoked speculation Europe is failing to contain its debt crisis.
West Texas Intermediate futures fell as much as 1 percent after settling yesterday at the highest price since July 26. Italy’s 10-year-bond yield closed for the second time in a week above the 7 percent threshold that prompted Greece, Ireland and Portugal to seek European Union bailouts. Crude inventories rose last week, the American Petroleum Institute said. An Energy Department report today may show they fell 1.2 million barrels, according to a Bloomberg News survey.
“We’re seeing a slight softening,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty. in Sydney. “It looks like a bit of profit taking as we approach that important technical level just below $100.”
Crude oil for December delivery slid as much as 95 cents to $98.42 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.56 at 3:29 p.m. Sydney time. Prices advanced $1.23 to $99.37 yesterday and have gained 20 percent in the past year.
Brent oil for January settlement fell 61 cents, or 0.5 percent, to $111.57 a barrel on the London-based ICE Futures Europe exchange. The European contract’s premium to West Texas crude was at $12.97 after settling yesterday at $13.02, the narrowest difference since May 24. The spread is down 53 percent from a record $27.88 on Oct. 14.
Technical Resistance
Oil’s rally in New York stalled after the 14-day relative strength index rose to near 70, according to data compiled by Bloomberg. A reading at that level signals prices may have risen too quickly and further gains aren’t sustainable. The index was at 65.8 today.
U.S. crude supplies increased 1.3 million barrels last week, according to the API, which 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.
Inventories of gasoline slid 2.9 million barrels in the week ended Nov. 11, the industry-funded API said in a report from Washington. The Energy Department report today may show they fell 1 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.
Italy’s 10-year-bond yield jumped 37 basis points to 7.07 percent, while Spain and Belgium sold less than the maximum target of bills at auctions as financing costs increased.
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
