BLBG:Crude Oil Drops From Three-Week High on Possible S&P Downgrades
Oil declined from the highest in almost three weeks in New York as investors speculated that fuel demand will falter amid signs Europe is struggling to tame its sovereign debt crisis.
West Texas Intermediate futures slipped as much as 0.6 percent after Standard & Poor’s said it may strip Germany and France of their AAA credit ratings as it put 15 euro nations on review for possible downgrades. A U.S. Energy Department report tomorrow may show gasoline and distillate inventories rose, while crude stockpiles decreased, according to a Bloomberg News survey of analysts.
“The market is anticipating the implications to global growth from Europe,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty. in Sydney. “The differential between Brent and West Texas is holding around the $9 level. In the absence of any supply-rattling events we would expect that to close back to parity.”
Crude for January delivery fell as much as 61 cents to $100.38 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.44 at 2:47 p.m. Sydney time. The contract yesterday gained 3 cents to $100.99, the highest close since Nov. 16. Prices are up 12 percent the past year.
Brent oil for January settlement decreased 53 cents, or 0.5 percent, to $109.28 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $8.84, compared with $8.82 yesterday and a record $27.88 on Oct. 14.
Ratings, Stockpiles
The euro area’s six AAA-rated countries are among the nations to be placed on a negative outlook, and their credit ratings may be cut depending on the result of a summit of European Union leaders on Dec. 9, S&P said yesterday.
The European Union accounted for 16 percent of the world’s oil demand in 2010, according to BP Plc’s Statistical Review of World Energy. The U.S. consumed 19.1 million barrels a day, or 21 percent of the total.
U.S. gasoline supplies probably climbed 1 million barrels last week and stockpiles of distillates, which include heating oil and diesel, rose 1.1 million barrels, according to the median of nine analyst estimates in a Bloomberg News survey before the Energy Department report. Crude inventories likely fell 1 million barrels as refineries ended seasonal maintenance and increased run rates, the survey shows.
Libyan Output
Libya will produce about 1 million barrels a day of crude oil by the end of the year, according to Abdalla El-Badri, secretary-general of the Organization of Petroleum Exporting Countries. The North African country will restore output to its pre-conflict level by the second half of next year, El-Badri told reporters yesterday in Qatar’s capital, Doha.
Libya’s crude output rose to 840,000 barrels a day by the end of last month, the state-run National Oil Corp. said Nov. 30. Production was about 1.6 million barrels a day before the revolt against the former regime of Muammar Qaddafi.
Hedge-funds and other money managers raised bullish bets on Brent crude by 14,833 contracts in the week ended Nov. 29, according to data from ICE Futures Europe. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 72,356 lots, the London-based exchange said yesterday in its weekly Commitment of Traders report.
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
